The Asian Development Bank (ADB) Administrative Tribunal (ADB AT) was established to enforce the rules governing the employment of its staff. Since its establishment over thirty years ago, it has actually performed that function, not just by enforcing the terms of employment of its staff but, beyond that, by exercising the equivalent in domestic legal orders of the power of judicial review to determine the validity of the governing rules themselves. The ADB AT tests that validity in light of what the Tribunal, in its very first case, called the Bank's “constituent instruments” and “general principles of law”.Footnote 1 However, the ADB Tribunal Statute actually contains no express clause on judicial review. Its jurisdiction ratione materiae refers solely to “nonobservance of the contract of employment or terms of appointment of [a] staff member”.Footnote 2 Yet the ADB AT has in many cases found it necessary to determine the validity of those rules and to strike them down when they are incompatible with some form of higher law.
A survey of the types of disputes brought before the ADB AT in its thirty-year historyFootnote 3, subject to the unavoidable overlap among the issues involved, shows that the bulk of the cases dealt with the straightforward implementation of the rules: that is, job classification and career development (27%), performance valuation (22%), disciplinary action (16%), and entitlements (13%). On the other hand, the balance (22%) pertained to the validity of the rules themselves, for example, the interpretation or revision of programs or benefits instituted by the Bank which can give rise to a conflict between those rules on the one hand, and on the other the Bank's constitutive instruments and general principles of law.
International administrative tribunals are but one of the mechanisms for institutional self-correction by international organizations, which are independent from external authorities and immune from the jurisdiction of national courts.Footnote 4 It is precisely this insulation from outside review that gives rise to an “access to justice” obligation owed by an international organization to, inter alia, its own staff members:
[W]henever IO [International Organizations] immunity prevents access to national courts for a claimant whose subjective rights or interests are impacted by an IO, that person should be granted access to an appropriate mode of dispute settlement. This must be done to address or remove the possibility of a denial of justice to a private party due to the application of jurisdictional immunities in favour of an IO.Footnote 5
When these tribunals determine the validity of the rules and practices of the organization, they affirm a normative hierarchy wherein lower order rules are either significantly validated or nullified by higher principles, derived from norms internally generated by the organization itself, and likewise – which is of particular concern in this paper – for those derived from outside the organization. This paper aims to identify the issues related to the exercise of that power.
I. The Power of Judicial Review at the ADB AT
The Tribunal's power of judicial review was first affirmed in a series of decisions (more specifically, in the third of that series) on whether otherwise tax exempt staff members should be reimbursed for taxes collected by member states that reserved the right to tax their nationals.
The ADB Charter provides that all salaries and emoluments paid to staff are tax exempt,Footnote 6 but allows member states to opt out of that clause. Two staff members, nationals of states that opted out, asked the Bank to reimburse their tax payments. In Mesch and Siy,Footnote 7 historically the second case in the Tribunal's docket and the first in the tax reimbursement series, the Tribunal held that although the ADB Charter did not require it to reimburse those income taxes, the Bank had also subsequently adopted the “principle of equal compensation for comparable work”, and it is this principle that gives rise to the duty to reimburse staff members whose compensation had been reduced by taxes collected by their states of nationality.
Accordingly, the Bank's governing board ordered reimbursements for the two claimants and to similarly situated staff members and, in addition, expressly excluded future tax reimbursements by stating that thenceforth the “principle of equal pay for comparable work and the equitable remuneration for similar responsibilities internally and externally shall be construed to be applied before the imposition of any tax” (emphasis added).Footnote 8
When the claimants challenged this in Mesch and Siy (No. 3),Footnote 9 the Bank argued that the Tribunal did “not possess powers of judicial review or appeal of decisions taken by the Board of Governors or the Board of Directors”,Footnote 10 citing specifically Article XIII of the ADB Tribunal Statute which expressly precluded it from reviewing decisions made by the Bank's highest policy-making bodies.Footnote 11 The Bank argued that the Tribunal's jurisdiction was limited to cases pertaining to the “non-observance” of a staff member's terms of employment.Footnote 12
The Tribunal rejected the jurisdictional argument and asserted its power to review board decisions, but nonetheless affirmed the board's decision. The Tribunal held that there were “fundamental and essential terms and conditions of employment” that cannot be unilaterally amended by the governing bodies of international organizations. The Tribunal characterized this constraint as “a recognized principle which can be regarded as part of the law common to international organizations”.Footnote 13 Accordingly, the Tribunal concluded that its jurisdiction extended to the “non-observance of contractual terms resulting from the infringement of that principle” (emphasis added).Footnote 14 Significantly, it held that Article XIII merely “preclude[d] the Statute [from] being read so as to limit or modify the powers of the Board of Directors”, and that the “fundamental and essential terms and conditions of employment” already limited the board's powers even before the creation of the Tribunal.Footnote 15
[T]he principle that fundamental and essential terms and conditions of employment cannot unilaterally be amended is now a recognized principle which can be regarded as part of the law common to international organizations. … However, when the Bank was founded there was no institution which was empowered to compel the Bank to comply with that principle. And when the Statute of the Tribunal was adopted, that limitation already existed: it was not one imposed or deemed to have been imposed by the Statute. The Tribunal was given jurisdiction in respect of complaints by staff members alleging non-observance of their contracts of employment and terms of appointment. That Statute does not prescribe any pertinent exception or qualification in respect of the jurisdiction of the Tribunal, and so that jurisdiction extends to non-observance of contractual terms resulting from the infringement of that principle (emphasis added).Footnote 16
The ADB as an institution, “[b]y establishing the Tribunal … did not introduce that principle: it merely provided a judicial remedy for its infringement”.Footnote 17 Significantly, the Tribunal referred to “limitations imposed on [the powers of the Board of Directors] otherwise than by the Statute” (emphasis added),Footnote 18 pertaining to “fundamental and essential terms” that even the board may not alter unilaterally. The Tribunal categorically formulated its power thus:Footnote 19
The Tribunal holds that it has competence to consider whether a decision of the Bank embodied in a Resolution of the Board of Directors is a nullity because it purports unilaterally to amend a fundamental and essential term or condition of employment.
Mesch and Siy (No. 3) thus affirmed not just the Tribunal's power to nullify a rule enacted by the Bank, including those rules enacted by the Bank's highest decision-making bodies, but also tested these against “fundamental and essential terms” not promulgated by the Bank itself. In the end, however, the Tribunal declined to rule on the merits on purely procedural grounds, namely the failure to exhaust internal remedies.
In Mesch and Siy (No. 4), the Tribunal reiterated this power, stating that it had the power to determine whether terms of employment laid down by the Bank had violated “governing principles” laid down, not just in the Bank's own issuances and practices, but in “general principles of law”.Footnote 20
The Bank rests [its jurisdictional] objection on the assertion that once the Resolution [disallowing tax reimbursements] was adopted [by the Board of Directors], it became the relevant term and condition of the Applicants employment … To adopt the Respondent's argument would be to deny jurisdiction to the Tribunal to decide whether a decision by the Bank (which could then always be said to establish the prevailing terms and conditions of employment) violated such governing principles as those found in the contract with the staff member, the Staff Rules and Regulations, the Personnel Handbook, Administrative Orders and Circulars, and general principles of law that limit the discretion of the Bank. Such a conclusion is untenable (emphasis added).Footnote 21
Significantly, even after this decision, in Breckner, during the final stage in the Bank's internal remedies before the appeals committee, the Bank took the position that the appeal must be dismissed because it was in effect an “appeal against a policy adopted by the Board pursuant to its powers under the Charter”… “and not the interpretation, or administrative application, of a Board policy”.Footnote 22 In this case, the claimants had challenged the validity of the Bank's early retirement program, which the Tribunal subsequently upheld.
These principles were categorically reaffirmed more recently in Perrin et al.,Footnote 23 the first in a series of decisions pertaining to changes in the Bank's education subsidies for staff members’ children. The Tribunal affirmed the general rule, namely that the ADB AT can only hear challenges to “decisions that directly and adversely affect a staff member” and it may not entertain a “direct appeal” against “legislative texts”. In other words, “legislative texts” may be challenged when they are concretely applied to a staff member, in which case it is the “individual decision implementing such a text [that] may be challenged on the ground that the underlying legislative provision was illegal”Footnote 24.
The Tribunal recognized that the governing statutes of other international administrative tribunals allow them to review the “lawfulness of the general decision”Footnote 25 before it is applied to a staff member, but the ADB AT's Statute would have to be revised to enable it to do that. It cited, with approval, the rationale offered by the International Labour Organization (ILO) Administrative Tribunal that to allow staff members to challenge a “general decision” or regulatory measure on the basis of a potential or hypothetical injury would “cause an unreasonable restriction of the right of defense” because the staff member would then have to anticipate how the “general decision” would affect his or her “future interests”, lest the tribunal end up validating the “general decision” en toto without taking into account those interests.Footnote 26
The case was thus found inadmissible because no actual injury had been shown. The dispute was eventually decided on its merits in Perrin et al. (No. 3) Footnote 27, holding that, although the Bank may not unilaterally amend the entitlement to education subsidy, it was free to amend the details of its implementation.
This rule against direct challenges to a “general decision”, unless it is applied to a specific staff member, is parallel to the “case or controversy” doctrine in constitutional litigation, which requires, respectively, that there be an actual dispute over legally demandable rights. It also relates to the notion of locus standi, which requires that the case be brought by a party who has suffered actual injury. These doctrines favour what are called “as-applied” challenges to the validity of a law and, conversely, discourage what are called facial challenges where the challenge faces the burden of showing that the law in question is invalid in every possible ex ante interpretation.
II. Normative Hierarchy
The power of judicial review presumes that there is a hierarchy of norms, where more specific rules and executive enactments can be struck down if they are irreconcilable with higher order norms.
The Tribunal has set forth such a “hierarchy of norms”Footnote 28 among its sources of law, “viewed expansively to include the ensemble of pertinent rules, regulations and practices within and without the institution”Footnote 29 (emphases added).
In its very first case, Lindsey, the ADB AT “frame[d] a clear architecture”Footnote 30 of its sources of law and laid down “the principal rules of law within the framework of which the facts must be considered”.Footnote 31 On one hand, these included the “constituent instruments of the Bank and of the Tribunal”, the Bank's own internal rules and regulations, and the employment contract. On the other hand, these also referred to externally generated norms, namely: “general principles of law”; a “common” law of international organizations; and, “by analogy”, comparable staff practices in international organizations and international administrative tribunals. These are largely unwritten and uncodified rules and principles.
Lindsey nullified the Bank's decision not to renew the contract of a staff member because that decision had failed to respect principles of fairness which constituted a “general practice accepted as law” even if these had “not [been] formally incorporated into the Bank's practice”.Footnote 32 Referring to the need for periodic written performance assessments, the Tribunal said:Footnote 33
So widespread is this practice within international organizations that it may now be said to qualify, in this sphere, as a general practice accepted as law … The fact that such provisions were not formally incorporated into the Bank's practice [until 1991] is a reflection of the insufficiency of the Bank's expression of pertinent obligation, not of the absence of such obligation.
Most significant, in Lindsey, the Tribunal included in its sources of law norms not codified in any of the Bank's legal instruments, nor by any of its authoritative bodies.
III. Recourse to Higher Order Norms
A. Two Approaches to the Autonomy of the Contractual Regime
Despite the normative hierarchy, the ADB AT has actually deferred to the contract as it were a self-contained regime, and yet in another case set aside the contract altogether on the principle of détournement de procedure because it did not reflect the true intent of the parties.
Bares et al.Footnote 34 dealt with a claim for compensation for the killing of the Bank's Assistant Legal Counsel inside the Bank's premises by a member of the Bank's own security staff. The Tribunal resolved the question of the Bank's liability solely as a matter of contract,Footnote 35 and emphatically declined to apply “public international law” to determine its institutional responsibility:
The Tribunal is not authorized to assess the international responsibility, tortious or otherwise, of an international organization on the plane of public international law, especially at the instance not of another person of comparable international standing, but rather upon the initiative of an aggrieved individual. The function of this Tribunal is much more limited (emphasis added).Footnote 36
In so far as assistance must be sought from general principles in the resolution of the problems raised by this case the Tribunal has had to exclude analogies derived from the law of tort as well as from the public international law of State responsibility. [T]he Tribunal has not considered it appropriate to … examin[e] the international law authorities bearing upon the liability of States in the law of State responsibility for the conduct of their “agents” so described in non-contractual terms (emphasis added).Footnote 37
The claimants had presented their case as one founded on tort liability. The Tribunal recognized that the Bank, “as an international organization, is immune from suit in national courts” and that the ADB AT is “not akin to one of general jurisdiction within the national sphere”.Footnote 38 Rather the ADB AT operates exclusively under its Statute, and can entertain the claim only to the extent that the claimant alleges “nonobservance of the contract of employment or terms of employment”.Footnote 39 Thus, the Tribunal concluded, the “proceedings in this forum are limited to claims in contract”.Footnote 40
On the other hand, the Tribunal has also completely set aside a contract of employment because it “fundamentally disregard[ed] reality”,Footnote 41 did “not reflect the true relationship” between the Bank and the claimant individual,Footnote 42 and was “a pure fiction”.Footnote 43 Amora v. ADB involved a Filipino who had worked for fifteen years in the Bank's printing office under a series of one-year contracts and short-term extensions. The contract characterized him as an “independent contractor” until just two years before he reached mandatory retirement age when he became a regular employee, and only then did he qualify for pension rights.
The ADB AT cited the ILO Administrative Tribunal which “looked behind the mere wording of the written contract, which sought to give a particular label to the contract, because that was merely a device to deny the employee the protection of the Staff Rules, and gave effect to the real intention of the parties”.Footnote 44
The Tribunal holds that recourse to successive short-term or temporary contractual appointments to jobs which are essentially of a permanent nature is not a fair employment practice, particularly if such appointments can be shown to have been made only to deny employees security of tenure or other conditions and benefits of service. Such appointments are permissible only if they have a clear functional justification and rationale in the exigencies of management and the nature of the job in question, and are subject to limitations based on norms of good administration (emphases added).Footnote 45
The Tribunal held that the “use of successive [short-term contracts] is an abuse of power, more precisely, a détournement de procedure, which is a more specific category of the more general détournement de pouvoir”.Footnote 46
B. Inapplicability of Domestic Law
In a case where a staff member invoked jurisprudence from domestic law to reopen and revise its decision the Tribunal declined to do so, but nonetheless recognized “exceptional situations” when it can refer to domestic law, namely where the “relevant law is lacking either in the form of written law or unwritten law” and the Tribunal may turn to domestic law for “interpretive analogy” or “as evidence of general principles of law”.Footnote 47
In a case involving allegations of sexual harassment, the Tribunal remarked that:Footnote 48
whatever national or international law [was being cited by the staff member was] not binding upon the Bank, which is an international organization and the law of which, with respect to the employment rights of staff members, is internal to the Bank and determined ultimately by the Tribunal (emphasis added).
In a dispute on pension benefits, the staff member had invoked a decision of the Supreme Court of India, which the Tribunal did not consider since the staff member did not cite “any prevailing international standard” and there was “no evidence whatsoever that [that Indian decision] constitute[d] a general practice in any other member State”.Footnote 49
C. Fundamental and Essential Terms and Conditions
As discussed earlier, Mesch and Siy (No. 4) Footnote 50 laid down the test to determine which terms are considered “fundamental and essential”, namely those that are “so basic that they will always be implied”Footnote 51 and which “by their very nature, are fundamental”,Footnote 52 such that they are “not even capable of express waiver save in extraordinary circumstances”,Footnote 53 and indeed “even without a written agreement, provided such practice is clear, unambiguous, consistent, and of significant duration, and is followed as a matter of obligation”.Footnote 54
Significantly, the Tribunal recognized that while the primacy of fundamental and essential terms “has become well-settled, in the jurisprudence of other international administrative tribunals, … there is far less clarity as to the criteria by which those conditions are to be identified”.Footnote 55 Moreover, these “formulations … have been often applied in an inconsistent or conclusory fashion”.Footnote 56
The Tribunal concluded that tax reimbursement was not a fundamental and essential term of employment. It made this finding on the basis of the Bank's own conduct showing that there was “no provision [or] any reference whatsoever” in any of its rules and regulations, nor “any pattern or practice of making such reimbursement, let alone one that is clear, unambiguous, consistent and of significant duration”.Footnote 57
Moreover, the Tribunal sought “to clarify which term or condition is under consideration”. The Bank contended that it was the right to tax reimbursement, while the staff members contended that they had the right to an “equitable and competitive salary”, of which tax reimbursement was a necessary and inseparable part.Footnote 58 The Tribunal dismissed the debate as “largely semantic” because both parties would agree that the principle of “equitable” remuneration was “fundamental and essential”. They differed solely on the issue of whether that principle was to be applied to the pre-tax salary (as the Bank contends that it pays all staff equitably) or the post-tax salary (as the staff members contend that what they keep is inequitably reduced after tax). Thus, the Tribunal framed the issue as “whether the obligation to reimburse tax is a fundamental and essential condition of employment”.Footnote 59
The Tribunal concluded that its first Mesch and Siy decision “was not meant to exalt tax reimbursement to such a level as to be irrevocable”,Footnote 60 and in this latter case categorically held that tax reimbursement was not a fundamental and essential term of employment. Even if tax reimbursement were considered to be merely a component of the larger principle of “equal pay for work of equal value”, that pertained to equal value to the employer. The Tribunal concluded: “The employer's obligation to treat his employees equally does not extend to remedying discrepancies created by the conduct of the State of which the employee is a citizen.”Footnote 61
Finally, Mesch and Siy (No. 4) would qualify tax reimbursement as a fundamental and essential term based on either its “intrinsic” characteristics, or if it has been “recognized” as such in express pronouncements or declarations made by the institution, or if it had been recognized as such either nationally or internationally. On the last of these criterion, the Tribunal looked at the practices of other international organizations and stated that even if there were “uniformity” in this practice, that was at best merely “persuasive” and would “not generate a legal obligation”. Indeed, it found that such practice was, at best, inconsistent. The Tribunal also looked at the case law of other international administrative tribunals, similarly characterizing these as merely persuasive and “not controlling”.Footnote 62 The Tribunal did not find anyFootnote 63
general norm of international law that is manifested in legislation or adjudication of international organizations, creating uniform rules of reimbursement of national income taxes, which might bind even in some informal sense the Respondent so as to prevent its modification or abridgment thereof.
There was a strong dissenting opinion by two of the five Tribunal judges,Footnote 64 saying that the majority had “de facto overruled [its original decision in Mesch and Siy] in such a way, without saying so” in order “to eliminate for the future the normal consequences that were to flow from one of its decisions”.Footnote 65 The dissent differed with the majority's reliance on the Bank's “past practice”, since that was the very practice that the Tribunal had already found to be illegal.Footnote 66 It especially rejected the majority's view that “some rights may become fundamental ‘if the parties so agree’.” The dissent insisted on an “objective definition” of what was fundamental, and did not accept the majority's reliance on the “subjective intents of the two parties”.Footnote 67
The core of the dissent is that the principle of equal pay for equal work is a fundamental and essential principle, as the majority itself stated, and that this principle is inseparable from the equalization of compensation, including via tax reimbursement. Equalization measures are indispensable to attain both “effective” and “formal” equality among staff. Finally, the dissent found that tax salary equalization was in line with “great uniformity among the regulations and practices of international organizations, concerning after tax salary equalization”.Footnote 68
It is worth noting that in the case involving the differential treatment of host country (Philippine) nationals vis-à-vis expatriate professional staff as regards certain non-salary benefits, the Tribunal declined to consider the comparable practice of other international and regional organizations. However, the Tribunal suggested that it may look to other international organizations had there been “a completely uniform practice”Footnote 69 or “if the contending considerations had been evenly balanced”.Footnote 70
The primacy of fundamental and essential terms will be reaffirmed more than two decades later in two cases where highly prized employee benefits were amended by the Bank, namely in Perrin et al.,Footnote 71 education subsidies for staff members’ children, and in Suzuki et al.,Footnote 72 health coverage for retired staff.
In Perrin et al. (No. 3),Footnote 73 the Tribunal characterized the right to education subsidies as “fundamental and essential” but distinguished the “normative texts”, which are unilaterally changeable, from the mere details of its implementation, which are:Footnote 74
While the EA [Educational Assistance] may be a fundamental and essential element of the Applicants’ terms of appointment, the same can, however, not be said concerning the details thereof. The employment contracts do not specify any details of the EA and staff concerned thus do not have a claim to specific details of this assistance. The normative texts in this respect are formulated in general terms … They do not guarantee specific amounts or a particular level of assistance, nor do they state that these cannot be subject to any change.
In Suzuki, the Tribunal maintained this distinction between normative and implementing rules, and held that the “details of coverage … of the healthcare benefit … in effect at any particular time are elements of a benefit which themselves are subject to change” and “do not violate any acquired right”.Footnote 75
When an administrative tribunal applies the concept of “fundamental and essential terms and conditions” to strike down inconsistent rules, it is exercising judicial review in its most robust form. The tribunal does not merely pass judgment upon the validity of acts by the Bank's rule-making bodies. It invokes higher-order norms not codified in any of the Bank's own legal instruments and, to complicate things further, are typically unwritten and amorphous. C.F. Amerasinghe, former Executive Secretary of the World Bank Administrative Tribunal, has referred to fundamental and essential principles as “superior hierarchically to the written law” and indeed the “supreme source of law relating to the international civil service”.Footnote 76
IV. Concluding Observations
The Tribunal rightly observed in Perrin et al. (No. 3),Footnote 77 almost a quarter century after the issue was first addressed in the Mesch and Siy Footnote 78 series of cases, that it is “totally proper and important that staff have the possibility to challenge the legality of changes to underlying general rules that apply or may apply to many present and future staff”. This is the strongest justification for the power of judicial review. Without it, a term or condition of employment may be immunized from the Tribunal's review simply by being legislated into a rule or administrative enactment by the Bank. Judicial review ensures that administrative power is not completely unfettered, and is exercised within certain bounds. Some of those bounds are laid down by the institution itself in its founding charter and other constitutive instruments, documents that are typically drafted with a long view – in contrast to quotidian administrative measures that address the specific needs of the day. And, significantly, some of those bounds are found in larger principles that have been embraced by international administrative tribunals. In this light, the exercise of judicial review by international administrative tribunals, and the normative hierarchy that it affirms, is a vital mechanism whereby international organizations discharge what has been called their “access to justice” obligation. Thus, international organizations can maintain their institutional autonomy while keeping in step with global norms of justice and fairness.
Acknowledgements
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Funding statement
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Competing interests
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Raul C. PANGALANGAN is a Professor of Law at the University of the Philippines and Judge at the Asian Development Bank Administrative Tribunal, Philippines. He is also the former Law Dean of the University of the Philippines, and former Judge of the International Criminal Court, The Hague.
