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BP 17.55, Annex C - Conclusions of the Board's Second Review of the Inspection Panel

These policies were prepared for use by World Bank staff and are not necessarily a complete treatment of the subject.
BP 17.55 - Annex C
January, 1999

The Executive Directors approved today, April 20, 1999, with immediate effect, the report of the Working Group on the Second Review of the Inspection Panel, as revised in light of the extensive consultations that took place after the report was first circulated. The report confirms the soundness of the Resolution establishing the Inspection Panel (IBRD Resolution No. 93-10, IDA Resolution No. 93-6 of September 22, 1993, hereinafter "the Resolution") and provides clarifications for its application.

These clarifications supplement the clarifications issued by the Board on October 17, 1996 and prevail over them in case of conflict. The report's recommendations approved by the Board are as follows:

1.  The Board reaffirms the Resolution, the importance of the Panel's function, its independence and integrity.

2.  Management will follow the Resolution. It will not communicate with the Board on matters associated with the request for inspection, except as provided for in the Resolution.  It will thus direct its response to the request, including any steps it intends to take to address its failures, if any, to the Panel.  Management will report to the Board any recommendations it may have, after the Panel completes its inspection and submits its findings, as envisaged in paragraph 23 of the Resolution.

3.  In its initial response to the request for inspection, Management will provide evidence that

(a) it has complied with the relevant Bank operational policies and procedures; or that

(b) there are serious failures attributable exclusively to its own actions or omissions in complying, but that it intends to comply with the relevant policies and procedures; or that

(c) the serious failures that may exist are exclusively attributable to the borrower or to other factors external to the Bank; or that

(d) the serious failures that may exist are attributable both to the Bank's non-compliance with the relevant operational policies and procedures and to the borrower or other external factors.

The Inspection Panel may independently agree or disagree, totally or partially, with Management's position and will proceed accordingly.
4.  When Management responds, admitting serious failures that are attributable exclusively or partly to the Bank, it will provide evidence that it has complied or intends to comply with the relevant operating policies and procedures.  This response will contain only those actions that the Bank has implemented or can implement by itself.
5.  The Inspection Panel will satisfy itself as to whether the Bank's compliance or evidence of intention to comply is adequate, and reflect this assessment in its reporting to the Board.
6.  The Panel will determine the eligibility of a request for inspection independently of any views that may be expressed by Management.  With respect to matters relating to the Bank's rights and obligations with respect to the request under consideration, the Panel will seek the advice of the Bank's Legal Department as required by the Resolution.
7.  For its recommendation on whether an investigation should be carried out, the Panel will satisfy itself that all the eligibility criteria provided for in the Resolution have been met.  It will base its recommendation on the information presented in the request, in the Management response, and  on  other  documentary  evidence.  The Panel may decide to visit the project country if it believes that this is necessary to establish the eligibility of the request.  In respect of such field visits, the Panel will not report on the Bank's failure to comply with its policies and procedures or its resulting material adverse effect; any definitive assessment of a serious failure of the Bank that has caused material adverse effect will be done after the Panel has completed its investigation.
8.  The original time limit, set forth in the Resolution for both Management's response to the request and the Panel's recommendation, will be strictly observed except for reasons of force majeure, i.e., reasons that are clearly beyond Management's or the Panel's control, respectively, as may be approved by the Board on a no objection basis.
9.  If the Panel so recommends, the Board will authorize an investigation without making a judgment on the merits of the claimants' request, and without discussion except with respect to the following technical eligibility criteria:


(a) The affected party consists of any two or more persons with common interests or concerns and who are in the borrower's territory (Resolution para.12).

(b) The request does assert in substance that a serious violation by the Bank of its operational policies and procedures has or is likely to have a material adverse effect on the requester (Resolution paras. 12 and 14a).

(c) The request does assert that its subject matter has been brought to Management's attention and that, in the requester's view, Management has failed to respond adequately demonstrating that it has followed or is taking steps to follow the Bank's policies and procedures (Resolution para. 13).

(d) The matter is not related to procurement (Resolution para. 14b).

(e) The related loan has not been closed or substantially disbursed (Resolution para. 14c).

(f) The Panel has not previously made a recommendation on the subject matter or, if it has, that the request does assert that there is new evidence or circumstances not known at the time of the prior request (Resolution para. 14d).

10.  Issues of interpretation of the Resolution will be cleared with the Board.

11.  The "preliminary assessment" concept, as described in the October 1996 Clarification, is no longer needed.  The paragraph entitled "The Panel's Function" in the October 1996 "Clarifications" is thus deleted.

12.  The profile of Panel activities, in-country, during the course of an investigation, should be kept as low as possible in keeping with its role as a fact-finding body on behalf of the Board.  The Panel's methods of investigation should not create the impression that it is investigating the borrower's performance.  However, the Board, acknowledging the important role of the Panel in contacting the requesters and in fact-finding on behalf of the Board, welcomes the Panel's efforts to gather information through consultations with affected people.  Given the need to conduct such work in an independent and low-profile manner, the Paneland Managementshould decline media contacts while an investigation is pending or underway.  Under those circumstances in which, in the judgment of the Panel or Management, it is necessary to respond to the media, comments should be limited to the process.  They will make it clear that the Panel's role is to investigate the Bank and not the borrower.

13.  As required by the Resolution, the Panel's report to the Board  will focus on  whether  there is a serious Bank failure to observe its operational policies and procedures with respect to project design, appraisal and/or implementation.  The report will include all relevant facts that are needed to understand fully the context and basis for the panel's findings and conclusions.  The Panel will discuss in its written report only those material adverse effects, alleged in the request, that have totally or partially resulted from serious Bank failure of compliance with its policies and procedures.  If the request alleges a material adverse effect and the Panel finds that it is not totally or partially caused by Bank failure, the Panel's report will so state without entering into analysis of the material adverse effect itself or its causes.

14.  For assessing material adverse effect, the without-project situation should be used as the base case for comparison, taking into account what baseline information may be available.  Non-accomplishments and unfulfilled expectations that do not generate a material deterioration compared to the without-project situation will not be considered as a material adverse effect for this purpose.  As the assessment of material adverse effect in the context of the complex reality of a specific project can be difficult, the Panel will have to exercise carefully its judgment on these matters, and be guided by Bank policies and procedures where relevant.

15.  A distinction has to be made between Management's report to the Board (Resolution para. 23), which addresses Bank failure and possible Bank remedial efforts and "action plans," agreed between the borrower and the Bank, in consultation with the requesters, that seek  to  improve  project   implementation.  The latter "action plans" are outside the purview of the Resolution, its 1996 clarification, and these clarifications.  In the event of agreement by the Bank and borrower on an action plan for the project, Management will communicate to the Panel the nature and outcomes of consultations with affected parties on the action plan.  Such an action plan, if warranted, will normally be considered by the Board in conjunction with the Management's report, submitted under Resolution para. 23.

16.  The Panel may submit to the Executive Directors for their consideration a report on their view of the adequacy of consultations with affected parties in the preparation of the action plans.  The Board should not ask the Panel for its view on other aspects of the action plans nor would it ask the Panel to monitor the implementation of the action plans.  The Panel's view on consultation with affected parties will be based on the information available to it by all means, but additional country visits will take place only by government invitation.

17.  The Board underlines the need for Management to make significant efforts to make the Inspection Panel better known in borrowing countries, as specified in the 1996 "Clarifications."

18.  The Board emphasizes the importance of prompt disclosure of information to claimants and the public, as stipulated in the Resolution (paras. 23 and 25) and in its 1996 Clarifications.  The Board requires that such information be provided by Management to claimants in their language, to the extent possible.

19.  The Board recognizes that enhancing the effectiveness of the Inspection Panel process through the above clarifications assumes adherence to them by all parties in good faith.  It also assumes the borrowers' consent for field visits envisaged in the Resolution.  If these assumptions prove to be incorrect, the Board will revisit the above conclusions.

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