The Development of the World Bank as an Autonomous Legal System James Alistair Hinton Submitted in accordance with the requirements for the degree of Doctor of Philosophy The University of Leeds School of Law June 2014 The candidate confirms that the work submitted is his own and that appropriate credit has been given where reference has been made to the work of others. This copy has been supplied on the understanding that it is copyright material and that no quotation from the thesis may be published without proper acknowledgement. © 2014 The University of Leeds and James Alistair Hinton i Acknowledgments My time on my Ph.D. programme would not have been possible without the help of a great many people. Family and friends helped me along the way, but to Wouter, to Benjamin and, most of all, to Steven, your example has inspired me and where I am today I owe to the three of you. ii Abstract This thesis positions the World Bank Inspection Panel at the centre of a World Bank legal system. International legal positivism can no longer explain the governance role and actions that the World Bank is undertaking and, instead, systems theory is put forward as an alternative tool of legal understanding. The conceptual tool of systems theory, as a tool of legal understanding, is analysed and constructed to provide a mechanism via which the Bank's behaviour can be framed in terms of law. The essentialist analysis of systems theory identifies, inter alia, the need for a Court-like body ruling upon the legal/illegal binary communication divide as being a required element for the evolution of a normative system into a legal system. The World Bank Inspection Panel is put forward as this Court-like body and its evolution identified as triggering a formative change in the understanding of how the World Bank operates. This thesis concludes that this shift into a legal system demands a new understanding of the problems and issues that confront the Bank today. Rather than framing its issues in terms of legal positivism, issues such as the Bank's democratic accountability, conditionality and mission creep should instead be framed in terms of systems theory. iii Table of Contents Acknowledgments ............................................................................................ ii Abstract .............................................................................................................. iii Table of Contents ............................................................................................. iv Abbreviations ................................................................................................. viii Introduction Chapter ...................................................................................... 1 0.1 Introduction ........................................................................................................ 1 0.2 Background .......................................................................................................... 1 0.3 Subject Area Chosen .......................................................................................... 4 0.4 What the World Bank Does and How it Operates ................................... 7 0.5 Methodology ..................................................................................................... 11 0.6 Chapter synopsis ............................................................................................. 13 0.6.1 Chapter One ............................................................................................................. 13 0.6.2 Chapter Two ............................................................................................................ 14 0.6.3 Chapter Three ......................................................................................................... 15 0.6.4 Chapter Four ............................................................................................................ 15 0.6.5 Chapter Five ............................................................................................................. 16 0.6.6 Chapter Six ................................................................................................................ 16 Chapter One: The Positive International Law Theorem and its Application to the World Bank .................................................................. 17 1.1 Introduction ..................................................................................................... 17 1.2 The Creation of the World Bank and its Articles of Agreement ...... 18 1.2.1 Events Leading up to the Bretton Woods Conference ........................... 19 1.2.2 The Effect of World War II ................................................................................. 21 1.2.3 The Conference ....................................................................................................... 22 1.2.4 Powers Assigned by the Treaty ....................................................................... 25 1.3 The Positivist Theory from State Law ...................................................... 28 1.4 The Application of Positive Theory to International Law ................. 30 1.4.1 Sovereignty ............................................................................................................... 32 1.4.2 Consent ...................................................................................................................... 37 1.4.3 Sovereign Equality ................................................................................................ 37 1.5 The Creation of Rules .................................................................................... 39 1.6 Evolution ............................................................................................................ 40 1.7 The Application of Positive Theory to International Organisations ...................................................................................................................................... 43 1.8 Treaty Interpretation .................................................................................... 46 1.8.1 The Vienna Convention on the Law of Treaties ....................................... 47 1.8.2 Customary International Law .......................................................................... 50 1.8.3 World Bank Usage ................................................................................................. 54 1.9 Model for Application to the World Bank ............................................... 58 1.10 World Bank History ..................................................................................... 59 1.10.1 The Reconstruction Years ............................................................................... 60 iv 1.10.2 The Move to Development .............................................................................. 61 1.10.3 The Beginning of Activism .............................................................................. 63 1.10.4 Quantity Rather Than Quality ....................................................................... 65 1.10.5 Conditionality, Corruption and Good Governance ............................... 67 1.10.6 President’s Agendas ........................................................................................... 74 1.11 Conclusion ...................................................................................................... 77 Chapter Two: Alternative Theories .......................................................... 79 2.1 Introduction ..................................................................................................... 79 2.2 Theories at Work ............................................................................................ 80 2.3 What is Public International Law? ............................................................ 85 2.4 Progressive Positivism .................................................................................. 88 2.4.1 Defining Progressive Positivism ..................................................................... 88 2.4.2 What Evidence Supports the Progressive Positivist Understanding? ................................................................................................................................................... 94 2.4.3 Applied to the World Bank ................................................................................ 97 2.5 Constitutionalisation of International Organisations ..................... 100 2.5.1 Defining Constitutionalisation ....................................................................... 100 2.5.2 Applied to the World Bank .............................................................................. 106 2.6 Global Administrative Law ....................................................................... 108 2.6.1 Defining Global Administrative Law ........................................................... 108 2.6.2 Applied to the World Bank .............................................................................. 112 2.7 International Institutional Law .............................................................. 116 2.8 Conclusion ...................................................................................................... 117 Chapter Three: Systems Theory ............................................................. 120 3.1 Introduction .................................................................................................. 120 3.2 Systems