Clock’s Ticking: What Does International Law Have to Do with the UN’s Liquidity Crisis?

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The United Nations is facing one of the worst liquidity crises. It has temporarily closed some of its offices, including its Geneva headquarters, twice since last December. The Secretary-General has already made an appeal to the Member States earlier this year. The Fifth Committee faces a significant challenge in effectively using the resources for the Organization to function properly. As of 9th May 2024, only 108 Member States have paid in full, and by the end of September 2023, the outstanding arrears totalled 1.35 billion USD. (Report of the Secretary-General, para. 5) What is hidden behind the numbers that often go undiscussed is a legal one. This post briefly touches upon the legal questions, recalling that making the payment is not only a political commitment but also a legal obligation that states should take seriously. If not, states may face a series of legal consequences, particularly when the mandate is seriously affected.

Financial Contribution as a Legal Obligation

Most importantly, the Charter clearly states that Members of the UN are under a financial obligation under Article 17(2), which is to be apportioned by the General Assembly. Although the assessment is pursuant to a GA resolution, it is generally agreed that financial obligations are legal obligations as the provision uses the term “shall,” in contrast to several articles appearing under Chapter IV of the Charter concerning the powers and competence of the GA; that the GA “may make recommendations” (see, e.g., Art 10) or “may recommend measures” (Art 14). (see e.g., the UN Charter commentary MN46, and here) Whereas the ICJ in the Certain Expenses advisory opinion does not expressly review the question as to whether a Member State making a payment on the basis of a regular scale of assessment is a legal obligation, it can be implied from the Court’s unquestioning reference to the preamble of resolution 1583 (XV), which states that Article 17(2) “creates binding legal obligations on such States to pay their assessed shares.” (p.178) This view is also found in individual opinions of several judges (see, e.g., Judge Spender, p.183; Judge Morelli, p.219).

A question may arise when a Member State disagrees with the budget and decides to cast a negative vote. In this case, would it be legally obliged to make a payment? The short answer to this question is a yes, but one should look closer into the provisions and the practice. Indeed, a draft resolution concerning the budget can be rejected since the Charter provides in Article 18(2) that the decision of the GA approving the budget requires a two-thirds majority of the members present and voting since it is considered an “important question.” In practice, several draft resolutions get rejected when approving the annual budget in the Fifth Committee that oversees administrative and budgetary questions. For instance, when reviewing the program budget for 2024, there was an attempt by several delegations not to allocate resources required to implement the resolutions adopted by the Human Rights Council. This draft was eventually rejected with a vote of 73 to 17, with more than 50 states abstaining.

However, based on a textual reading of Article 17 of the UN Charter and the contemporary practice of the Organization, it is difficult to accommodate the view that a GA resolution imposing financial obligations upon its Member States is binding for only those states that approved it. Article 17 clearly provides that the obligation of Member States to make financial contributions derives from the organizational capacity of the GA, not an individual Member State, as the Charter determines that the GA “shall consider and approve the budget” and the expenses “shall be borne by the Members as apportioned by” the GA. Furthermore, it is established and recognized in relevant GA resolutions (para. 6) that resolutions on the programme budget (including financing of UN peacekeeping operations) and the regular scale assessment conducted by the Committee on Contributions are to be adopted without a vote. While it is also true that there have been cases where resolutions were adopted after a vote, these resolutions were mainly concerned with how to use the budget (see, e.g., here) rather than regarding a general obligation of the Member State to make payments. Of course, “adopted without vote”  may not equate to a unanimous decision accepted without objections. Conversely, however, it cannot be said that the Member State did not intend to accept the obligations therein unless it expressly cast a negative vote, even if the State sufficiently explained its position. Once a resolution has been adopted in accordance with the rules of procedure, it is presumed to have been validly adopted, (cf Namibia, para. 20; WHO Use of Nuclear Weapons, para. 29; Wall, para. 35) and the Member States would be expected to carry out the financial obligations as approved by the GA.

Possible Legal Consequences and Realistic Concerns

One of the obvious consequences that can be considered is to be found in the Charter. Article 19 further elucidates that a Member State shall have no vote in the GA when it did not pay its financial contributions. However, this has two added qualifications. One is that “the amount of its arrears equals or exceeds the amount of the contributions due from it for the proceeding two full years,” and the other is that such a failure should not derive from conditions “beyond the control of the member.” What constitutes a circumstance beyond the Member’s control is to be decided after a holistic review of the information provided, including “information on economic aggregates, government revenues, and expenditure, foreign exchange resources, indebtedness, difficulties in meeting domestic or international financial obligations and any other information that might support the claim that failure to make necessary payments had been attributable to conditions beyond the control of the Member States.” (A/RES/54/237C, para. 3) In fact, it is not uncommon for Member States to lose their votes. Most recently, the voting rights of six Member States have been suspended (see here), including Afghanistan, Comoros, Ecuador, Sao Tome and Principe, Somalia and Venezuela. Three of these states were granted permission to vote via resolution 78/2 until the end of the seventy-eighth session of the GA on the basis that the failure to make payment was beyond their control. This solution, however, is not enough to fuel the economically-challenged Organization.

Another possible scenario in this regard, which has not been considered so far, is the Organization making a claim against the Member States liable for the damage caused to the UN when its work is severely affected due to the arrears in the payment. The ICJ, in the Reparations for injuries advisory opinion, famously acknowledged that the UN “must be deemed to have those powers which, though not expressly provided in the Charter, are conferred upon it by necessary implication as being essential to the performance of its duties” (p.182). According to the Court, this provided the grounds for the Organization to bring claims in relation to damages directly caused to the Organization or its officials. (p.187) It may be argued whether the non-implementation of financial obligations leading to a claims dispute between the Organization and the Member States can be deemed necessary to carry out its functions. Indeed, nothing is more “essential to the performance of its duties” than expecting the Member States to implement their financial obligations to contribute to the funding of the United Nations in good faith. (Art. 2(2))

As stressed by the UN Secretary General, the Organization risks being bankrupt by August (see here, p. 2),  unless shared action is taken by both recalcitrant states who are in arrears of paying their contributions and the Secretariat to find ways to manage and re-allocate the resources effectively. Most importantly, it is also a fact that the UN Member States have a legal obligation to make financial contributions and make the Organization work properly with adequate resources. Admittedly, some hurdles cannot be overcome by simple legal reasoning. The Organization has been undergoing an existential crisis, and deepened political contestation has allowed many to question its way forward. Still, Member States seem to be in general agreement that the world is better with the UN than without it. It provides a valuable forum for political dialogues, even where it does not always bring fruitful outcomes.

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