Jam v. International Finance Corporation: Implications of Limited Immunity for MDBs and Private Banks
The Supreme Court has ruled in the case of Jam v. International Finance Corporation that the International Finance Corporation and other “international organizations” designated as such under the International Organizations Immunities Act do not have absolute immunity from the jurisdiction of the federal and state courts of the United States. Rather, international organizations have limited immunity coextensive with that of foreign governments under the Foreign Sovereign Immunities Act, and are therefore subject to suit in certain cases, such as those arising from their U.S.-linked commercial activities.
The Jam decision sets the stage for further jurisdictional and, potentially, merits proceedings in Jam, now on remand to the lower courts. Moreover, the decision likely opens the door to future litigation testing the liability of multilateral development banks and other international organizations where it is alleged that their seemingly commercial activities or other acts (such as waiver of immunity) render them liable to third parties.
This legal update discusses the Jam case and its immediate and potentially wider ramifications for multilateral development banks, other international organizations, and private entities that finance, invest in, or otherwise participate in development and infrastructure projects, particularly those incorporating environmental, social, and governance standards (such as the Equator Principles).