IDB to be Sued in District Court as Defendant

In another judicial setback in the U.S. for the Inter-American Development Bank, on August 3, 2011, the District Court for the District of Columbia granted a Motion to Amend a complaint filed in 2006 by Jorge R. Vila, an independent consultant, against the Inter-American Investment Corporation (IIC). The amended complaint joins the Inter-American Development Bank (IDB) as a defendant.

Based on a recent Supreme Court decision (Krupski v. Costa Crociere S.p.A, 2010), the District Court decided that because the IDB knew or should have known that it could have been sued by Vila when he filed his complaint against the IIC in 2006, his Motion to Amend his complaint by adding the IDB as a defendant should be granted. In making its decision, the Court considered that the two entities are “inextricably linked through their organizational structure.”

This is not the first judicial setback in this case for the IDB. On July 15, 2010 the District Court granted a Motion by Vila to Strike the IIC’s renewed claim to immunity, a matter decided against the IIC by the District Court in February 2008 and confirmed by the Court of Appeals in June 2009.

The claim against the IIC has entered the discovery phase, with Vila requesting documentation from the IIC and testimony from IIC and IDB officers in anticipation of a jury trial in the near future.

Vila sued the IIC in October 2006, claiming that the IIC repeatedly requested, received and benefitted from his services from January to August 2003, but then refused to compensate him. Court papers show that 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 also 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.

In June 2009, the Court of Appeals confirmed the District Court for the District of Columbia decision of February 2008 that the legal immunities of the IIC did not shield the institution from claims brought by independent contractors. Their Petition to Appeal enbanc before the Court of Appeals of August 3, 2009 was also denied by the Court of Appeals on October 5, 2009.

This case continues to receive increasing attention from government, the media and other observers of international organizations, since the Court decisions already handed down represent a judicial precedent, and, at the trial, the focus is expected to be on the internal controls and audits, transparency and accountability of the IIC and the IDB, in addition to their relationship with external contractors.

The law firm of Arnold & Porter is representing the IIC, and Douglas Hartnett of Elitok & Hartnett, is representing Mr Vila.

 

Bea Edwards is International Reform Director for the Government Accountability Project, the nation’s leading whistleblower protection organization.