Accountability in International Project Finance: The Equator Principles and the Creation of Third-Party-Beneficiary Status for Project-Affected Communities

Abstract

The creation of a third-party-beneficiary interest is a method to police the actions of entities doing business abroad. This Note discusses the viability of gleaning from the Principles a third-party-beneficiary right for project-affected communities to ensure compliance with the Industry\u27s social and environmental standards. Part I defines project finance, discusses the emergence of social and environmental standards, such as the Principles, and describes the requirements of each of the ten individual Principles. Part II provides real world examples of the lack of effectiveness of the Principles in practice and explains some of the forces contributing to this practical failure. Part II also provides an overview of third-party-beneficiary rights in US law, describes three relevant cases involving third-party-beneficiary rights, and explains barriers to enforcement of a third-party- beneficiary claim. Finally, Part III analyzes the viability of enforcing compliance with the Principles through third-party- beneficiary rights under US contract law