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Jorge Vila v. Inter-American Investment Corporation

Bea Edwards, January 27, 2010

On January 7th, 2010, the Inter-American Investment Corporation (IIC), the private sector lending arm of the IDB, decided not to appeal the decision of the US District Court of Appeals obliging the multinational development bank to waive its immunity. The IIC/IDB has been sued by Jorge Vila, an independent banking consultant in emerging markets, for unjust enrichment. Vila bases his lawsuit on his claim that the IIC solicited his services as a financial expert, accepted them and benefited from them, but subsequently refused to pay for them.

When Vila attempted to sue the IIC, the institution claimed that it was immune from such suits under the International Organizations Immunities Act. This law, which exempts international organizations such as the United Nations, the World Bank and the IDB “from every form of judicial process,” was extended to cover the IIC by Ronald Reagan in 1986.

The IIC, however, has now accumulated a lengthy record of judicial decisions denying the institution immunity from Vila’s claim. The District Court for the District of Columbia handed down a ruling on February 22nd, 2008 that Mr Vila had a legitimate claim against the IIC. On June 19th, 2009, the Court of Appeals confirmed the decision of the District Court that the IIC was not immune to claims from independent contractors like Mr Vila. In another judicial setback for the IIC, the institution’s Petition to Appeal embank before the Court of Appeals, filed on August 3rd, 2009, was also denied on October 5th, 2009.

After the October ruling, attorneys for the IIC informed Vila’s attorney, Douglas Hartnett of Elitok and Hartnett, that they would appeal the decision to the U.S. Supreme Court. Four days before the deadline for initiating the Supreme Court appeal, however, Hartnett was notified that the IIC/IDB had reconsidered.

The Court of Appeals decision is now firm, and the case will proceed. It establishes an important precedent on a number of issues related to international organizations: the relationships of these institutions with external contractors, especially consultants, and their internal controls, transparency and accountability.

Vila filed his lawsuit in October, 2006, claiming that the IIC repeatedly requested, received and benefited from his services from January to August 2003, but then refused him compensation. Court papers show that during that period, Vila was given broad authority to negotiate on behalf of the IIC with clients and potential co-financiers the terms and conditions of IIC loans. He was asked to participate in internal project and credit discussions, as well as in external negotiations with clients and counterparts, and drafted internal and external IIC documentation for the signature of IIC senior management.

The International Organizations Immunities Act has been subject to growing criticism in recent years, as, among other things, it deprives the staff members of these organizations of access to an impartial judiciary forum in labor disputes.

The law firm of Arnold & Porter has represented the IIC throughout these proceedings.