The Revised Equator Principles Call on Companies to Seek Free, Prior, and Informed Consent. Next up: Governments?

The new draft Equator Principles reflect and build upon the IFC Performance Standards’ requirement that companies obtain the free, prior, and informed consent ("FPIC") of indigenous peoples for development projects. This language reflects the UN Declaration on the Rights of Indigenous Peoples (“UNDRIP”), which was supported by all but four countries in the UN General Assembly in 2007. The four countries that originally voted against the Declaration – the United States, Canada, Australia, and New Zealand – have since reversed their positions.

Although the Declaration is a soft law instrument and therefore not binding on companies, given the broad support that it received at the UN General Assembly, it is certainly persuasive. And, in fact, national courts of countries including Belize and Colombia have begun to cite to the Declaration in their court decisions related to indigenous peoples. 

Nevertheless, state practice lags woefully behind the Declaration. Although the laws of a number of countries in Latin America provide for consultation with indigenous peoples, none have regulations in place requiring their consent. At the same time, some of their highest courts, such as Colombia’s Constitutional Court, have followed the precedent of the Inter-American Court of Human Rights and stated that governments should obtain consent for development projects with significant impacts. 

The current scenario places companies in a highly awkward position. First, in some instances, they are asked to follow regulations that call for the company – working closely with the government – to consult with indigenous communities, even though the court system might invalidate the project if consent is not obtained. Moreover, when companies seek consent because they apply the IFC Performance Standards or the Equator Principles, or because they believe that seeking consent constitutes good risk management, they might receive little support or even face opposition from their host governments. 

Curiously, it is governments, not companies, that sometimes are the impediment to the implementation of the UNDRIP. There are many reasons why governments might be slow to implement the UNDRIP, including fear that they will lose control of development projects within their territories. Nevertheless, unless governments clarify their positions on the rights of indigenous peoples, and bring their regulations into line with their international commitments and the rulings of national and regional courts, companies will continue to face an awkward double standard. The new Equator Principles merely increase the visibility of the current conundrum, in which lenders impose higher standards for projects on indigenous lands than most governments.


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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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