A Critique of Immunity for Multilateral Development Banks in National Courts

Abstract

Since their emergence after World War II , multilateral development banks ( MDB s, or Banks) have become crucial players in promoting economic development in the developing world. The theory of immunity enables the MDB s to shield themselves from jurisdictions of national courts, and protects them in Bank operations. This paper presents a critique of the immunity claimed by MDB s, and argues that such a claim of immunity should be restrictive, rather than absolute. Meanwhile, it is important to establish adequate dispute settlement systems within the MDB s, counterbalancing their immunities from legal process. The systems offer a fair trial to private parties, and should be independent from Bank management. As for the Asian Infrastructure Investment Bank ( AIIB ), the young Bank’s operations can be on the ground only with its immunities respected by members, while the committed high standards are possible only with adequate internal dispute settlement systems.