Jam v. International Finance Corp.

2019-02-27

Headline: Court rules international organizations do not have absolute immunity and can face U.S. suits for commercial activities, increasing exposure for development banks and agencies like the IFC.

Holding: The Court held that the IOIA ties international organizations' immunity to whatever immunity foreign governments enjoy today, so the FSIA governs and the International Finance Corporation is not absolutely immune.

Real World Impact:

Permits U.S. lawsuits against international organizations for commercial activities
Subject to FSIA limits, courts may hear damage claims against development banks
Communities harmed by funded projects may have new legal options in U.S. courts

Topics: international organization immunity, sovereign immunity, development banks, environmental pollution, commercial activity lawsuits

Summary

Background

A group of local farmers, fishermen, and a village sued the International Finance Corporation (IFC), a development bank that financed a coal power plant in Gujarat, India. They say the plant polluted their air, land, and water. The IFC claimed immunity from U.S. courts under the International Organizations Immunities Act of 1945, which gives international organizations the same immunity as foreign governments.

Reasoning

The Court considered whether the Act tied an international organization's immunity to the immunity foreign governments had in 1945 or to the immunity those governments have today. The majority held that the Act links international organizations' immunity to the current law governing foreign sovereign immunity, so the Foreign Sovereign Immunities Act now controls. As a result, international organizations like the IFC are not automatically immune from suits arising from commercial activity.

Real world impact

The ruling allows people to sue international organizations in U.S. courts when the alleged harm relates to commercial activities, subject to limits in the Foreign Sovereign Immunities Act such as a required connection to the United States. Development banks, agencies, and communities affected by projects financed or managed by those organizations may see more litigation. The decision is not a final answer on liability; facts and statutory exceptions will determine whether particular suits can proceed.

Dissents or concurrances

Justice Breyer dissented. He argued Congress intended the Act to give international organizations the broad immunity that foreign governments had in 1945, to encourage organizations to locate and operate in the United States and avoid interference by single nations' courts.