Amicus Curiae Brief — Budha Jam, et al., Petitioners v. International Finance Corporation

No. 21-995

In the Supreme Court of the United States

__________________

BUDHA JAM, ET AL.,

Petitioners,

v.

INTERNATIONAL FINANCE CORPORATION,

Respondent.

__________________

On Petition for Writ of Certiorari to the

United States Court of Appeals

for the Second Circuit

__________________

BRIEF OF FORMER UNITED STATES DIPLOMATS

AND INTERNATIONAL DEVELOPMENT

PRACTITIONERS AS AMICI CURIAE IN SUPPORT

OF PETITION FOR CERTIORARI

__________________

DOUGLASS CASSEL

Counsel of Record

VIREN MASCARENHAS

VIVASVAT DADWAL

KING & SPALDING LLP

1185 Avenue of the Americas

34th Floor

New York, New York 10036

(212) 556-2100

Dcassel@kslaw.com

Counsel for Amici Curiae

February 14, 2022

Becker Gallagher · Cincinnati, OH · Washington, D.C. · 800.890.5001

i

TABLE OF CONTENTS

TABLE OF AUTHORITIES . . . . . . . . . . . . . . . . . . . ii

INTEREST OF AMICI CURIAE . . . . . . . . . . . . . . . . 1

SUMMARY OF ARGUMENT . . . . . . . . . . . . . . . . . . 3

ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

I. The Court of Appeals Decided an “Important

Question” of Federal Law . . . . . . . . . . . . . . . . . . . 8

A. Social and Environmental Conditions on IFC

Loans Are Critical for the Global Goal of

Sustainable Development . . . . . . . . . . . . . . . . 8

B. Accountability Is of Undisputed

Importance. . . . . . . . . . . . . . . . . . . . . . . . . . . 10

C. Judicial Review Is Necessary Because

Internal IFC Administrative Procedures

Are Ineffective . . . . . . . . . . . . . . . . . . . . . . . . 13

D. U.S. Courts Are Essential for Judicial

Review of IFC Loan Activities in

Washington . . . . . . . . . . . . . . . . . . . . . . . . . . 15

II. The Question of IFC Immunity for Its Loan

Activities in Washington “Has Not Been, But

Should Be, Settled by This Court.” . . . . . . . . . . 26

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

ii

TABLE OF AUTHORITIES

United States Cases

Air & Liquid Sys. Corp. v. DeVries,

139 S. Ct. 986 (2019). . . . . . . . . . . . . . . . . . . . . . 18

Banco Nacional de Cuba v. Sabbatino,

376 U.S. 398 (1964). . . . . . . . . . . . . . . . . . . . . . . 18

Hedgpeth v. Whitman Walker Clinic,

22 A. 3d 789 (D.C. Ct. Apps. 2011) (en banc)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Jam v. IFC,

139 S. Ct. 759 (2019). . . . . . . . . . . . . . . . . . . . . . . 3

Jam v. IFC,

3 F. 4th 405 (2021) . . . . . . . . . . . . . . 3, 4, 6, 16, 17

OBB Personenverkehr AG v. Sachs,

577 U.S. 27 (2015). . . . . . . . . . . . . . . . . . . . . . 6, 16

Saudi Arabia v. Nelson,

507 U.S. 349 (1993). . . . . . . . . . . . . . . . . . 6, 16, 17

Other United States Authorities

American Law Institute, Restatement of the Law

Third, Conflict of Laws, Prelim. Draft 3 (2017)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

American Law Institute, Restatement of the Law

Third, Torts: Liability for Physical and

Emotional Harm (2010) . . . . . . . . . . . . . 18, 19, 20

iii

Antony Blinken, Secretary of State, 10th

Anniversary of the UN Guiding Principles on

Business and Human Rights, Press Statement,

June 16, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

George W. Bush, Remarks to the Plenary Session of

the United Nations General Assembly in New

York City, Sept. 14, 2005 . . . . . . . . . . . . . . . . . . . 9

Congressional Research Service, Foreign Assistance:

An Introduction to U.S. Programs and Policy,

Updated January 10, 2022 . . . . . . . . . . . . . . . . . . 9

Barack Obama, Remarks by the President at the

Millennium Development Goals Summit in New

York, New York, Sept. 22, 2010 . . . . . . . . . . . . . . 9

[Proposed Amended] Class Action Complaint for

Damages and Equitable Relief, filed in Jam v.

IFC, Civil Action No. 15-cv-00612 (JDB), D.D.C.,

March 12, 2020 . . . . . . . . . . . . . . . . . . . . 17, 19, 24

United States Agency for International

Development, USAID History, accessible at

https://www.usaid.gov/who-we-are/usaid-history

........................................ 9

United States Agency for International

Development, 2020 Sustainability Report and

Implementation Plan, Executive Summary, June

30, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

United States Department of the Treasury,

International Programs, Congressional

Justification for Appropriations, FY 2021 . . . . . . 4

iv

United States, Secretary of State, Responsible

Business Conduct: First National Action Plan for

the United States of America, December 16, 2016

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9, 10, 12

United States Supreme Court, Rules of the Supreme

Court of the United States, Rule 10(c),

Considerations Governing Review on Certiorari

........................................ 3

Foreign Cases

M/S Hindustan Engineering & General Mazdoor

Union (Regd) & Ors. v. Union of India & Ors

(High Court of Delhi), ILR (2000) II Delhi 353 . 25

Okpabi v Royal Dutch Shell,

[2021] UKSC 3 . . . . . . . . . . . . . . . . . . . . 20, 21, 24

Vedanta Resources v. Lungowe,

[2019] UKSC 20 . . . . . . . . . . . . . . . . . . . 20, 21, 24

Foreign Legislation

Government of India, Notification S.O. 2448(E)

dated July 13, 2016. India, United Nations

(Privileges and Immunities) Act, 1947 . . . . . . . 25

International Authorities

H UMAN R IGHTS L ITIGATI ON A GAI NST

MULTINATIONALS IN PRACTICE, R. Meeran, ed.

(Oxford Univ. Press 2021) . . . . . . . . . . . . . . . . . 26

International Finance Corporation, External Review

of IFC/MIGA E&S Accountability, including

CAO’s Role and Effectiveness Report and

Recommendations, June 2020 . . . . . . 5, 12, 13, 14

v

International Finance Corporation, IFC/MIGA

Independent Accountability Mechanism (CAO)

Policy, June 28, 2021 . . . . . . . . . . . . . . . . . . . . . 14

International Finance Corporation, Meeting the

Moment: 2021 Annual Report. . . . . . . . . . . passim

International Finance Corporation’s Policy on

Environmental and Social Sustainability,

January 1, 2012 . . . . . . . . . . . . . 10, 11, 16, 22, 23

G. Skinner, R. McCorquodale and O. De Schutter,

The Third Pillar: Access to Judicial Remedies for

Human Rights Violations by Transnational

Business (2013) . . . . . . . . . . . . . . . . . . . . . . . . . . 26

United Nations Human Rights Council, Report of

the Special Representative of the SecretaryGeneral on the issue of human rights and

transnational corporations and other business

enterprises, John Ruggie, Guiding Principles on

Business and Human Rights: Implementing the

United Nations “Protect, Respect and Remedy”

Framework, UN Doc. A/HRC/17/31, March 21,

2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11, 12, 15

United Nations, Report of the United Nations

Conference on Environment and Development,

Annex I: Rio Declaration on Environment and

Development, UN Doc. A/CONF.151/26 (Vol. I),

August 12, 1992 . . . . . . . . . . . . . . . . . . . . . . . . . . 8

vi

United Nations, Transforming our world: The 2030

Agenda for Sustainable Development, UN

General Assembly Res. A/RES/70/1, September

25, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

United Nations, Human Rights Council Resolution,

Human rights and transnational corporations

and other business enterprises,

A/HRC/RES./17/4, June 16, 2011 . . . . . . . . . . . . 11

United Nations, Human Rights Council Resolution

48/13, The human right to a clean, healthy and

sustainable environment, October 8, 2021 . . . . . 11

1

INTEREST OF AMICI CURIAE1

Amici are former United States diplomats and

current and former international development

practitioners. Their broad experience in U.S.

diplomacy, multilateral institutions, and nonprofit

organizations brings a collective wealth of expertise.

They include a Nobel Prize-winning economist who was

Senior Vice President and Chief Economist of the

World Bank (Joseph Stiglitz); a former top

Administrator (Brian Atwood) and two former senior

officials (Harriet Babbitt and Paige Alexander) of the

U.S. Agency for International Development; former and

current experts (Mr. Atwood and Mr. Stiglitz) with

high level responsibilities in the 38-nation

Organization for Economic Cooperation and

Development; a former Under Secretary of State (Mr.

Atwood), a former Assistant Secretary (Robert

Gelbard), four former U.S. Ambassadors (Ambassadors

Harriet Babbitt, Robert Gelbard, J.D. Bindenagel, and

William Harrop) and a former Minister Counselor

(James Bullock); three current or former leaders of

nonprofit international development organizations

(Paige Alexander, Ambassador Babbitt and Ray

Offenheiser); and experts in development economics

(Dr. Vijaya Ramachandran) and microfinance (Kim

Wilson).

1

The parties in the case received timely notice and have consented

in writing to the filing of this amicus brief; the petitioner’s letter

is on file with the Clerk of the Court. Pursuant to Rule 37.6, amici

state that no person or entity other than the amici curiae or their

counsel of record has made a monetary contribution to the

preparation or submission of this brief or authored the brief in

whole or in part.

2

Amici urge the Court to review this case because of

the need for clear guidance on a central legal issue of

overriding importance – whether the International

Finance Corporation (“IFC”) can be sued in the United

States for its commercial loan activities in Washington,

D.C., concerning social and environmental conditions

on projects abroad that it has financed. The fact

pattern of this case is highly likely to recur. Continued

judicial uncertainty on this central issue could

adversely affect both U.S. foreign policy interests and

the rights of persons affected by IFC loans. Supreme

Court guidance is needed.

The collective experience of amici in many countries

teaches that the IFC must be held accountable for the

social and environmental impacts of the projects its

loans make possible. Internal IFC accountability

procedures are ineffective. Judicial review is essential.

Amici are concerned that the ruling by the Court of

Appeals – in effect that U.S. courts cannot review IFC

commercial loan activities in Washington to finance

projects abroad – strikes a blow against accountability,

judicial review, and the vital IFC mission to promote

socially and environmentally sustainable development.

That mission is of critical importance, not only for

global development, but also for U.S. foreign policy

interests in securing stable and prosperous markets

and polities.

Amici do not address the technical legal aspects of

statutory interpretation. Nor do they express a view on

the particular facts of this case. However, amici believe

that this case is about what the IFC did (or did not do)

in Washington, not what a loan recipient did in India.

3

The plaintiffs here sue only the IFC, not the loan

recipient. If IFC loan activities in Washington cannot

be judicially reviewed in U.S. courts, they often – as in

this case – cannot be judicially reviewed anywhere.

Amici are accordingly convinced that important

public policies call for review of the legal issues in this

case by the highest court in the land.

SUMMARY OF ARGUMENT

Independently of the grounds advanced by

petitioners, amici urge the Supreme Court to accept

review because the Court of Appeals decided “an

important question of federal law that has not been,

but should be, settled by this Court.” Supreme Court

Rule 10(c).

Three years ago, the Supreme Court ruled in this

case that the IFC has the same immunity as foreign

states from suit in U.S. courts, subject to the same

exceptions. Jam v. IFC, 139 S. Ct. 759 (2019). The

Court briefly commented on, but did not decide,

whether IFC loan activities in Washington, D.C.,

qualify under the exception which allows U.S. lawsuits

based on “commercial activities” in the U.S. Id. at 772.

The Court remanded to the lower courts for further

proceedings.

On remand, the Court of Appeals ruled that U.S.

courts lack jurisdiction over this lawsuit, because the

“gravamen” of the case is “injurious activity that

occurred in India.” Jam v. IFC, 3 F. 4th 405, 407

(2021). The Court reasoned that the commercial

activities exception allows U.S. lawsuits only if “based

upon” commercial activities carried on in the U.S., or

4

upon acts performed in the U.S. in connection with

commercial activity elsewhere. Id. at 408. It ruled that

Mr. Jam’s lawsuit against the IFC is not “based upon”

IFC loan activities in Washington, because the

“gravamen” of the case (or its “core” or “crux,” id. at

409) is in India, where the environmental impacts of an

IFC-funded power plant allegedly injured Mr. Jam. Id.

The important issue of whether the IFC can be sued

in the U.S. for its commercial loan activities in

Washington, D.C., in regard to projects abroad, merits

Supreme Court review, for several reasons.

First, the overriding importance of socially and

environmentally sustainable development is recognized

by multilateral institutions, U.S. foreign policy, and the

IFC. IFC financial assistance to private sector

development projects – over $30 billion in over 70

countries in 2021 alone2 – is significant for sustainable

development. As the largest single shareholder in IFC

capital by far,3 and the only country “with veto power

over major IMF decisions,”4 the U.S. has a unique

interest in ensuring that IFC loans support

development which is socially and environmentally

sustainable.

2

IFC Meeting the Moment: 2021 Annual Report (“2021 Annual

Report”), p. 17.

3

Id. p. 85. U.S. support accounts for about 21% of IFC shares. The

next closest is Japan with 8%.

4

U.S. Dept. of Treasury, International Programs, Congressional

Justification for Appropriations, FY 2021, p. 6.

5

Second, multilateral institutions, U.S. foreign

policy, and the IFC also recognize that accountability

is essential to make IFC social and environmental

conditions on loans effective.

Third, for those loan conditions to be effective,

accountability must include judicial review. Internal

IFC administrative procedures by the Compliance

Advisor Ombudsman (“CAO”) have proven ineffective.

A recent external review, commissioned by the IFC and

chaired by a former IFC executive vice president,

concluded, “Remedial actions carried out by IFC,

MIGA, and their clients in response to CAO

noncompliance findings and to correct related harm are

at present mostly unsatisfactory.”5 The review cited the

CAO finding that remedial actions have been effective

in only 13% of the cases. Remedial actions are “partly

satisfactory” in 37% of the cases. In fully 50% of the

cases, the remedial actions are “unsatisfactory.”6

The external reviewers aptly commented, “Such

results raise questions about the commitment of

IFC/MIGA to their E&S [environmental and social]

obligations and the effectiveness of IFC/MIGA in

holding their clients accountable to E&S obligations.”7

5

External Review of IFC/MIGA E&S Accountability, including

CAO’s Role and Effectiveness Report and Recommendations, June

2020 (“External Review”), ¶ 58. MIGA is the Multilateral

Investment Guarantee Agency of the World Bank Group.

6

Id.

7

Id.

6

Fourth, judicial review of IFC commercial loan

activities in Washington by U.S. courts is both

warranted and necessary. The Court of Appeals

thought that the “gravamen” (or the “core” or “crux”) of

this lawsuit is in India, not the U.S., and therefore U.S.

courts have no jurisdiction. Jam v. IFC, 3 F. 4th 405,

407, 409. This misconceives basic principles of tort law.

The alleged negligence of the IFC is separate and

independent of any wrong committed by its loan

recipient in India, and is actionable in and of itself.

Moreover, if U.S. courts cannot review IFC loan

activities in Washington, alleged IFC failures to enforce

social and environmental conditions on loans often

cannot be reviewed anywhere – as in this case. That

gap calls for Supreme Court review.

In evaluating the crux of this lawsuit, the Supreme

Court should take into account the IFC’s extensive

activities to define, implement, monitor, supervise and

enforce its social and economic loan conditions. All of

these activities place exclusively or predominantly in

Washington. The IFC does not merely issue decisions

or write checks in Washington. The IFC carries out (or

in this case allegedly failed to carry out) elaborate

commercial activities in its Washington headquarters.

Its U.S. actions on loans for projects abroad are far

more extensive and central to IFC loan operations

than, for example, merely selling a ticket in the U.S.

for a train pass in Europe (as in OBB Personenverkehr

AG v. Sachs, 577 U.S. 27 (2015)), or hiring a person for

work overseas (as in Saudi Arabia v. Nelson, 507 U.S.

349 (1993)), key precedents relied on by the Court of

Appeals.

7

This case is not about the alleged conduct of the

loan recipient in India. That recipient is not a

defendant in the case; only the IFC is sued. The loan

recipient’s conduct may be relevant to support the

claim that IFC actions in Washington were deficient.

However, the crux of the case is what happened in

Washington, not in India. The main issue – the

“gravamen” of the case – is whether the IFC committed

negligence and other unlawful conduct by violating its

social and environmental criteria and procedures for

granting, disbursing, monitoring and cancelling loans.

If the IFC in Washington failed to exercise

reasonable care in its commercial loan activities and

created a risk of harm to others, it committed the tort

of negligence in Washington against the persons

affected by the project it financed. Issues of whether

that breach injured Mr. Jam and, if so, what remedy

might be appropriate, are separate questions for the

merits and remedial stages, not for the jurisdictional

stage.

This fact pattern is likely to recur. The IFC makes

numerous loans for private sector projects abroad; in

2021, it supported over 300 projects in over 70

countries.8 All are subject to social and environmental

conditions. In many instances these loan conditions are

neither met nor enforced, resulting in injuries to

affected persons.

8

IFC 2021 Annual Report, p. 17.

8

Yet current law is unclear to potential plaintiffs,

loan recipients, the 185 IFC member States,9 and the

lower courts. While this Court held three years ago

that the IFC does not enjoy blanket immunity in U.S.

courts, the Court of Appeals has now ruled that the

main relevant exception to immunity (for “commercial

activities”) does not apply. Continued uncertainty may

lead to wasted time and effort in fruitless lawsuits.

Supreme Court guidance is needed to make clear

whether IFC loan activities in Washington are subject

to judicial review in U.S. courts.

ARGUMENT

I. The Court of Appeals Decided an “Important

Question” of Federal Law.

A. Social and Environmental Conditions on

IFC Loans Are Critical for the Global Goal

of Sustainable Development.

The overriding importance of socially and

environmentally sustainable development has long

been recognized by multilateral institutions, U.S.

foreign policy, and the IFC.

The imperative of sustainable development was

recognized decades ago by 178 nations in the Rio

Declaration on Environment and Development,10 and

9

Id. p. 85.

10

Report of the United Nations Conference on Environment and

Development, Annex I: Rio Declaration on Environment and

Development, UN Doc. A/CONF.151/26 (Vol. I), 12 August 1992,

Principle 4.

9

recently by 193 nations in the 2030 Agenda for Global

Development.11 The Agenda reiterates that “social and

economic development depends on the sustainable

management of our planet’s natural resources.”12

The U.S. policy commitment is longstanding and

bipartisan. The U.S. joined in the Rio Declaration and

supports the 2030 Agenda’s Sustainable Development

Goals.13 By the 1990s sustainability was the “top

priority” of the U.S. Agency for International

Development (“USAID”).14 Sustainability goals were

stressed by Presidents George W. Bush,15 and Barack

Obama,16 and reaffirmed by USAID in each of the last

two Administrations.17 The U.S. encourages strong

11

Transforming our world: The 2030 Agenda for Sustainable

Development, UN General Assembly Res. A/RES/70/1, 25

September 2015.

12

Id. ¶ 33.

13

Secretary of State, Responsible Business Conduct: First National

Action Plan for the United States of America, December 16, 2016,

(“RBC”), p. 16.

14

USAID History, accessible at https://www.usaid.gov/who-weare/usaid-history.

15

George W. Bush, Remarks to the Plenary Session of the United

Nations General Assembly in New York City, Sept. 14, 2005.

16

Barack Obama, Remarks by the President at the Millennium

Development Goals Summit in New York, New York, Sept. 22,

2010.

17

U.S. AID, 2020 Sustainability Report and Implementation Plan,

Executive Summary, June 30, 2020; Congressional Research

10

sustainability policies “across multilateral development

banks.”18

The IFC, too, recognizes sustainability as a “critical

component” of its operations and “fundamental to good

development impact.”19 The IFC requires loan

recipients to meet the IFC Performance Standards on

Environmental and Social Sustainability.20 The IFC

Sustainability Policy also imposes due diligence

requirements on the IFC itself.21 The Environmental

and Social Policy and Risk department reports directly

to the IFC Managing Director.22

B. Accountability

Importance.

Is

of

Undisputed

Accountability is likewise recognized as essential to

sustainability by multilateral institutions, the U.S. and

the IFC.

Globally, the United Nations Human Rights Council

in 2011 unanimously endorsed the UN Guiding

Service, Foreign Assistance: An Introduction to U.S. Programs and

Policy, updated January 10, 2022, p. 6.

18

RBC, note 13 above, p. 9.

19

IFC Annual Report 2021, p. 46.

20

Adopted in 2006 and updated effective in 2012.

21

International Finance Corporation’s Policy on Environmental

and Social Sustainability (“IFC Policy”), ¶¶ 19-21, 26.

22

IFC 2021 Annual Report, p. 46.

11

Principles on Business and Human Rights.23 The

Guiding Principles are now widely embraced, including

by the U.S.,24 and the IFC.25 Human rights include the

human right to a “clean, healthy and sustainable

environment.”26

As noted by the IFC’s recent external review, the

Guiding Principles call for “governments and business

enterprises to always observe the principles of ‘Protect,

23

Report of the Special Representative of the Secretary-General on

the issue of human rights and transnational corporations and other

business enterprises, John Ruggie, Guiding Principles on Business

and Human Rights: Implementing the United Nations “Protect,

Respect and Remedy” Framework, UN Doc. A/HRC/17/31, March

21, 2011 (“Guiding Principles”), endorsed by UN Human Rights

Council Resolution, Human rights and transnational corporations

and other business enterprises, A/HRC/RES./17/4, 16 June 2011,

¶ 1.

24

Antony Blinken, Secretary of State, 10th Anniversary of the UN

Guiding Principles on Business and Human Rights, Press

Statement, June 16, 2021; Secretary of State, Responsible Business

Conduct: First National Action Plan for the United States of

America, December 16, 2016, p. 8.

25

International Finance Corporation’s Policy on Environmental

and Social Sustainability, ¶ 12 and note 4. While not expressly

citing the Guiding Principles, these provisions of IFC Policy,

adopted one year after the Guiding Principles, echo their content.

See also the IFC Good Practice Note: Addressing Grievances from

Project-Affected Communities, p. 1.

26

UN Human Rights Council Res. 48/13, The human right to a

clean, healthy and sustainable environment, October 8, 2021, ¶ 1.

The Preamble notes that “more than 155 States have recognized

some form of a right to a healthy environment …”

12

Respect and Remedy.’”27 The Guiding Principles have

been a “major milestone” in guiding private sector

companies “to provide remedy in situations in which

they have contributed to harm.”28 The Guiding

Principles also specify that states - “when acting as

members of multilateral institutions that deal with

business-related issues,” such as the IFC - retain the

duty under international human rights law to ensure

that persons affected by abuses “have access to

effective remedy.”29

Especially as the largest shareholder by far in the

IFC, the U.S. has a duty to ensure that persons

affected by IFC loans have access to effective remedy.

Indeed, the U.S. seeks to ensure accountability for

organizations like the IFC by building consensus “for

strong remedy mechanisms through its participation in

… multinational organizations.”30

The IFC likewise recognizes, “We are accountable to

our partners, clients, and communities we serve as we

aim to achieve our development objectives in an

environmentally and socially responsible manner.”31

IFC has been “working hard to deliver on a series of

accountability and transparency reforms we committed

27

External Review, note 5 above, ¶ 79.

28

Id. ¶ 7.

29

Guiding Principles, note 23 above, Principles 10 and 25 and

Commentary.

30

RBC, note 13 above, p. 23.

31

IFC 2021 Annual Report, p. 21.

13

to in the last few years, including in response to an

independent external review of IFC’s environmental

and social (E&S) accountability.”32

C. Judicial Review Is Necessary Because

Internal IFC Administrative Procedures

Are Ineffective.

The IFC endorses accountability in word but often

falls woefully short in deed. Internal IFC

administrative procedures by the Compliance Advisor

Ombudsman (“CAO”) have proven ineffective. The

recent external review, commissioned by the IFC and

chaired by a former IFC executive vice president,

concluded, “Remedial actions carried out by IFC,

MIGA, and their clients in response to CAO

noncompliance findings and to correct related harm are

at present mostly unsatisfactory.”33

The data are telling: the review cited the CAO

finding that remedial actions have been effective in

only 13% of the cases. Remedial actions are “partly

satisfactory” in 37% of the cases. In fully 50% of the

cases, the remedial actions are “unsatisfactory.”34

The IFC has since reformed its internal procedures

and adopted a new CAO Policy. As a result, its

managing director asserts that accountability

32

Id.

33

External Review, note 5 above, ¶ 58.

34

Id.

14

mechanisms within the IFC have “never been

stronger.”35

It may well be true that IFC mechanisms have

never been stronger. However, they have been so weak

in practice that to say they are now better on paper

means very little. And even on paper, to cite only one

example, the new CAO Policy fails to define “remedial

actions.”36

Judicial accountability is needed precisely because

internal IFC accountability has proven ineffective.

Even the IFC’s recent reforms illustrate the value of

judicial review. Those reforms respond to the recent

external review,37 the “impetus” for which was a

“concern about increasing litigation risks faced by IFC

(including with respect to the status of immunity

defenses available to international organizations) …”38

That concern was “intensified” by this case.39 Jam v.

IFC was the subject of extended discussion in the

report of the external review.40

35

IFC 2021 Annual Report, Highlights, Letter from IFC managing

director.

36

IFC/MIGA Independent Accountability Mechanism (CAO) Policy,

June 28, 2021, ¶ 131.

37

IFC Annual Report 2021, p. 1.

38

External Review, note 5 above, ¶ 15.

39

Id. ¶ 14.

40

Id. ¶¶ 134-39.

15

Experience, then, counsels in favor of judicial

review of IFC enforcement of social and environmental

conditions on its loans. So, too, does principle. As noted

above, states acting as members of international

institutions retain their duty to ensure access to

“effective” remedies for persons injured by those

institutions. As counseled by the Guiding Principles,

“Effective judicial mechanisms are at the core of

ensuring access to remedy.”41

To ensure access to an effective remedy, it is

important that the Supreme Court address the issue of

whether that review can take place in U.S. courts

under the main exception to immunity relevant to IFC

commercial loan activities in Washington - the

“commercial activities” exception. The alleged facts of

this case provide a straightforward opportunity to

clarify whether that exception permits U.S. judicial

review of alleged IFC negligence and other unlawful

conduct in the U.S., for failure to enforce IFC social and

environmental loan conditions for projects abroad.

D. U.S. Courts Are Essential for Judicial

Review of IFC Loan Activities in

Washington.

Judicial review of IFC commercial loan activities

should most logically take place in the courts of the

U.S., where the IFC is headquartered and where it

carries out elaborate commercial activities to define,

implement, monitor, and enforce social and

environmental conditions on loans.

41

Guiding Principles, note 23 above, Principle 26 Commentary.

16

The Court of Appeals did not question the

“commercial” nature of those loan activities. Instead, it

ruled that the “gravamen” of this case is in India,

where the plaintiffs were allegedly injured, and not in

the U.S., where the IFC defines its social and

environmental conditions on loans and then

implements, monitors and enforces them. Jam v. IFC,

3 F. 4th 405, 407-09 (2021).

In the view of amici, the Court of Appeals

misconceives what this case is about. This is not a suit

against the loan recipient in India. It is a suit against

the IFC in Washington. The core issue is not what the

loan recipient did. The core issue is whether the IFC

negligently failed in Washington to carry out due

diligence of its social and environmental loan

conditions, as required by its Sustainability Policy.42

In order to exercise due diligence, the IFC conducts

elaborate procedures in its Washington headquarters.

These procedures constitute commercial activities

carried out in the U.S. The IFC does not merely decide

to grant loans or issue checks in the U.S. Its U.S.

actions to implement, monitor and enforce social and

environmental conditions on loans for projects abroad

are far more extensive and central to IFC loan

operations than, for example, merely selling a ticket in

the U.S. for a train pass in Europe (as in OBB

Personenverkehr AG v. Sachs, 577 U.S. 27 (2015)), or

hiring a person for work overseas (as in Saudi Arabia

v. Nelson, 507 U.S. 349)), key precedents relied on by

the Court of Appeals.

42

IFC Policy, note 21 above, ¶¶ 20, 21.

17

The Court of Appeals ruled that IFC loan activities

in Washington could not, by themselves, give rise to a

cause of action by plaintiffs. It invoked this Court’s

guidance that the “gravamen” of a case centers on

“‘those elements of a claim that, if proven, would entitle

a plaintiff to relief under his theory of the case.’” 3 F.

4th at 408, citing Saudi Arabia v. Nelson, 507 U.S. at

357. It reasoned that, “Absent the operation of the

Plant in India, or appellants’ injuries in India, there

would have been nothing wrongful about IFC’s

disbursement of funds.” 3 F. 4th at 409.

With respect, that reasoning and its broader

implications merit Supreme Court review. The core of

plaintiffs’ suit is the tort of alleged negligence by the

IFC. Count I alleges negligence;43 Count II alleges

negligent supervision by the IFC.44 Under both counts

the IFC is alleged to have violated federal common

law.45

43

Proposed Amended Complaint, note 50 below, ¶¶ 364-71.

44

Id. ¶¶ 372-76.

45

Id. ¶¶ 193, 417(b).

18

In ascertaining federal common law on torts,46

courts commonly look to the Restatement of Torts. E.g.,

Air & Liquid Sys. Corp. v. DeVries, 139 S. Ct. 986, 993

(2019). The Restatement defines negligence as a failure

to “exercise reasonable care under all the

circumstances.”47 Primary relevant factors are the

foreseeable likelihood and severity of harm, and the

burden of precautions to reduce or eliminate the risk of

harm.48 Whether by act or omission, “the key point is

that the defendant’s conduct has created a risk of harm

to others.”49

Here the IFC is alleged to have “created a risk of

harm to others” by financing a project that would not

46

Plaintiffs also allege violations of the laws of the District of

Columbia and India. Proposed Amended Complaint, ¶¶ 193,

417(b). Under the Restatement of the Law Third, Conflict of Laws,

Prelim. Draft 3 (2017), § 6.05, their claims would be governed by

US law because US law is the “law of the State of conduct” (here

the IFC loan activities). Absent a governing statute, federal

common law would most likely govern a suit (such as this one)

touching on foreign relations. Banco Nacional de Cuba v.

Sabbatino, 376 U.S. 398, 425-27 (1964). Even if District of

Columbia law were to govern, the Restatement of Torts would

likely guide the decision. Hedgpeth v. Whitman Walker Clinic, 22

A. 3d 789, 798 (D.C. Ct. Apps. 2011) (en banc).

47

American Law Institute, Restatement of the Law Third, Torts:

Liability for Physical and Emotional Harm, (“Restatement Torts”),

Ch. 1, § 3.

48

Id. and Restatement Torts, Ch. 3, § 19, Comment d.

49

Id. Ch. 1, § 3, Comment c.

19

otherwise have gone forward.50 The IFC is alleged to

have foreseen the likelihood and the severity of harm,

but not to have taken precautions – enforcing the social

and environmental conditions on its loan – which

would not have been a great burden on the IFC.51

Enforcement oversight of loan conditions constitutes

commercial activity. Those IFC failures primarily took

place in Washington, not India.

The foreseeable likelihood that harm would result

from the IFC loan – unless IFC social and

environmental conditions were imposed and enforced -was not negated by intervening events in India. The

Restatement recognizes that in many situations, “the

likelihood of eventual harm depends in part on the

likelihood of various events that may occur between the

time of the actor’s alleged negligence and the time of

the harm itself. Such events commonly include human

behavior in all its forms; …”52

Nor does the intervention of a third party – here the

coal plant operator in India – negate the IFC’s own

alleged negligence. As the Restatement makes clear,

“The conduct of a defendant can lack reasonable care

insofar as it foreseeably combines with or permits the

50

[Proposed Amended] Class Action Complaint for Damages and

Equitable Relief, filed in Jam v. IFC, Civil Action No. 15-cv-00612

(JDB), D.D.C., March 12, 2020 (“Proposed Amended Complaint”),

¶¶ 46, 57-59.

51

Id. ¶¶ 48-51, 367-70, 373-76.

52

Restatement Torts, Ch. 1, § 3, Comment g.

20

improper conduct of … a third party.”53 Courts

recognize that “the existence of intervening causes does

not ordinarily elide a prior actor’s liability.”54 Liability

is appropriate where an actor (here the IFC) is

allegedly negligent “precisely because of the failure to

adopt adequate precaution against the risk of harm

created by another’s acts or omissions …”55

Citing several English cases, the Reporter’s Note

recognizes that “English law, overall, provides support

for the explanation of the negligence standard” of the

Restatement.56 English common law decisions

recognize a duty of care owed by private companies to

persons affected by activities of their business

associates overseas (whether subsidiaries or

contractors). That duty of care by a company is

separate from any duty of the foreign entity. Vedanta

Resources v. Lungowe, [2019] UKSC 20, ¶¶ 21, 42 and

65; Okpabi v Royal Dutch Shell, [2021] UKSC 3, ¶¶ 7

and 8.

Vedanta ruled that a British parent company owed

a duty of care to persons allegedly injured by pollution

from a mine operated by its subsidiary in Zambia. The

unanimous Supreme Court explained that a parent

company’s duty of care toward persons affected by its

subsidiary “depends on the extent to which, and the

53

Id. Ch. 3, § 19.

54

Id. Ch. 6, § 34.

55

Id. Ch. 6, § 34 Comment d.

56

Id., Reporter’s Note to Ch. 1, § 3, Comment d.

21

way in which, the parent availed itself of the

opportunity to take over, intervene in, control,

supervise or advise the management of the relevant

operations … of the subsidiary.” Vedanta, ¶ 49.

Here the IFC meets the Vedanta test for a duty of

care. The IFC “controls” the environmental

management of the loan recipient - the “relevant

operations” - by imposing environmental conditions on

the loan. It “supervises” compliance with those

conditions and “advises” the recipient with regard to

them.

Okpabi similarly ruled that a British-domiciled

parent company, Royal Dutch Shell, owed a duty of

care to persons allegedly injured by oil spills from

pipelines operated by its subsidiary in Nigeria. Again,

the unanimous U.K. Supreme Court, reaffirming

Vedanta (Okpabi ¶ 25), reiterated that a duty of care

may arise “regardless of the exercise of control.”

Okpabi ¶ 148. The parent company may incur

responsibility to third parties:

“if, in published materials, it holds itself out as

exercising that degree of supervision and control

of its subsidiaries, even if it does not in fact do

so. In such circumstances its very omission may

constitute the abdication of a responsibility

which it has publicly undertaken.”

Okpabi, ¶ 148, quoting Vedanta ¶ 53.

Here the IFC “holds itself out” as supervising,

collaborating, advising, engaging, controlling, imposing

requirements, and “working with” loan recipients to

ensure compliance with social and environmental

22

conditions. The IFC asserts, “We hold ourselves

accountable to the same environmental and social

standards we ask of our clients.”57 Its published

Sustainability Policy58, for example, explains the

following:

• Supervision: “IFC seeks to ensure, through its

due diligence, monitoring, and supervision

efforts, that the business activities it finances

are implemented in accordance with the

requirements of the Performance Standards.”59

• Collaboration: IFC endeavors to “collaborate”

with loan recipients “who identify and manage

environmental and social risks.”60

• Advice: IFC advises individual loan recipients

on environmental and social performance.61

• Engagement: “With respect to any particular

activity, the level of IFC’s engagement is

determined by the nature and scope of the

proposed investment or advisory activity, as well

57

IFC 2021 Annual Report, p. 86.

58

IFC Policy, note 21 above.

59

Id. ¶ 7.

60

Id. ¶ 15.

61

Id. ¶ 16.

23

as the specific circumstances of the collaboration

and relationship with the client.”62

• Control: IFC’s engagement includes “specific

provisions” with which loan recipients must

comply, including “action plans,” “reporting,”

and “supervision visits.” 63 In case of

noncompliance, IFC will “work with” the

recipient and, if need be, exercise “rights and

remedies.”64

• Changes: IFC requires loan recipients to adjust

their environmental and social “Management

System” to meet IFC Performance Standards.65

• Remediation: IFC “works with” loan recipients

“to determine possible remediation measures.”66

By these criteria, the IFC could well be found at

trial to owe a common law duty of care to persons

allegedly affected by its allegedly negligent failure to

enforce its social and environmental criteria, which the

IFC “holds itself out” to enforce.

It makes no difference that the IFC is not a parent

corporation, or that loan recipients are not IFC

subsidiaries. The U.K. Supreme Court made clear that,

62

Id. ¶ 19.

63

Id. ¶ 24.

64

Id. ¶ 24.

65

Id. ¶ 25.

66

Id. ¶ 26.

24

“for these purposes, there is nothing special or

conclusive about the bare parent/subsidiary

relationship.” Vedanta ¶ 54; Okpabi ¶149. “[T]he

liability of parent companies in relation to the activities

of their subsidiaries is not, of itself, a distinct category

of liability in common law negligence.” Vedanta, ¶ 49.

The liability of parent companies “raises no novel

issues of law and is to be determined on ordinary,

general principles of the law of tort regarding the

imposition of a duty of care.” Okpabi, ¶ 25. “[T]here is

no special test applicable to the tortious responsibility

of a parent company for the activities of its subsidiary

…” ¶ 27, 149.

Under “ordinary, general principles of the law of

tort,” then, such as those invoked by Mr. Jam under

federal common law,67 there is a case to be made that

the IFC owes a duty of care to persons (like Mr. Jam)

harmed by IFC’s alleged failure adequately to

supervise and enforce the social and environmental

conditions on its loans for projects abroad. That case

deserves to be tested at trial, not dismissed on the

ground that the crux of the case against the IFC is in

India, not the U.S.

A further reason for U.S. Supreme Court review is

that, if U.S. courts have no jurisdiction to review IFC

commercial loan activities in Washington, those

activities often cannot be meaningfully reviewed

anywhere – as in this case. The Government of India

has issued a Notification whose legal effect is that the

67

Proposed Amended Complaint, note 50 above, ¶¶ 193, 366, 369

and 417(b).

25

IFC cannot be sued in India, except when the IFC

expressly waives its immunity in particular cases.68 As

far as amici are able to determine, the IFC has not

waived its Indian immunity in this case.

Judicial review of IFC commercial loan activities in

Washington would not overburden U.S. courts. When

this case was previously before the Supreme Court, the

IFC argued that to allow damages suits against it

“would bring a flood of foreign-plaintiff litigation into

U. S. courts.” 139 S. Ct. at 771. The Court was not

persuaded. Among other reasons, the Court noted the

U.S. government’s “serious doubts” about whether this

suit is “based upon” IFC commercial activities in the

U.S. Id. at 772. As discussed above, amici believe that

this case against the IFC is indeed based upon its

commercial loan activities in the U.S., and not merely

on the effects of those activities in India.

Allowing damages suits against the IFC would not

open the gates to a flood of litigation. Three years have

passed since this Court ruled that the IFC is not

entirely immune from suit in U.S. courts. Since then,

as far as counsel for amici have been able to ascertain,

68

Government of India, Notification S.O. 2448(E) dated 13 July

2016 extending certain provisions of India’s United Nations

(Privileges and Immunities) Act, 1947 (UN Act 1947”) to the IFC.

As a result, the IFC in India enjoys “immunity from every form of

legal process except insofar as in any particular case it has

expressly waived its immunity.” UN Act 1947, Schedule, Art. II,

§ 2. See M/S Hindustan Engineering & General Mazdoor Union

(Regd) & Ors. v. Union of India & Ors (High Court of Delhi), ILR

(2000) II Delhi 353, ¶ 19; Declaration of [Indian Senior Advocate]

Ritin Rai, August 19, 2019, filed in the District Court in Jam v.

IFC.

26

not a single suit has been filed against the IFC by

persons allegedly harmed by IFC failure to enforce

social and environmental conditions on loans. The

reasons are not hard to understand. In practical

reality, transnational suits like Jam v. IFC are difficult

and expensive to bring and to prove.69 The real problem

is not that a flood of lawsuits would follow a ruling that

U.S. courts have jurisdiction, but rather that fishers,

farmers and other persons of limited means in

developing countries, allegedly harmed by IFC failure

to enforce social and environmental conditions on

loans, will continue to encounter serious barriers to

access to justice.70

II. The Question of IFC Immunity for Its Loan

Activities in Washington “Has Not Been, But

Should Be, Settled by this Court.”

The preceding sections show the overriding

importance of U.S. judicial review of allegedly

negligent and otherwise unlawful commercial loan

activities of the IFC in the U.S. The IFC is

headquartered in the U.S. The U.S. is by far its largest

shareholder. The IFC acts in the U.S. to approve,

condition, monitor, supervise and enforce social and

environmental criteria on billions of dollars of private

sector loans abroad annually. U.S. judicial review of

69

See generally, e.g., HUMAN RIGHTS LITIGATION AGAINST

MULTINATIONALS IN PRACTICE, R. Meeran, ed. (Oxford Univ. Press

2021); G. Skinner, R. McCorquodale and O. De Schutter, The Third

Pillar: Access to Judicial Remedies for Human Rights Violations by

Transnational Business (2013).

70

Id. at 64.

27

IFC loan activities matters greatly to sustainability,

accountability, judicial review, and access to justice.

The question is also one which “has not been, but

should be, settled by this Court.” The answer affects

potential plaintiffs in many countries, loan recipients,

the 185 IFC member States, and the lower courts.

Gathering evidence, preparing pleadings, and

communicating with often indigent clients in

transnational cases like this one is a major

undertaking, in addition to the judicial time required

to adjudicate them. If U.S. courts indeed have

jurisdiction to hear such cases, the time and effort are

well spent because there may be no recourse to justice

elsewhere. On the other hand, if there is no U.S.

jurisdiction in cases like Jam v. IFC, it would be far

better for all concerned to know that before investing

significant resources in U.S. litigation. Yet the Court’s

prior judgment in this case, which left open the

“commercial activities” exception, contrasted with the

unpersuasive closing of that door by the Court of

Appeals on remand, leaves the law in a state of

confusion. This Court should accept this case for review

in order to provide clear and definitive guidance to all

those who would follow the law.

CONCLUSION

For the reasons stated above, amici urge the Court

to grant the petition for certiorari in this case.

28

Respectfully submitted,

DOUGLASS CASSEL

Counsel of Record

VIREN MASCARENHAS

VIVASVAT DADWAL

KING & SPALDING LLP

1185 Avenue of the Americas

34th Floor

New York, New York 10036

(212) 556-2100

Dcassel@kslaw.com

Counsel for Amici Curiae