On February 27, 2019, the United States Supreme Court held by a vote of seven to one that international organizations do not have absolute immunity from suit in U.S. courts. See Jam v. International Finance Corp., No. 17-1011, slip op. at 2 (U.S. Feb. 27, 2019). Rejecting the International Finance Corporation’s (IFC) argument that international organizations like the IFC maintain absolute immunity from suit in U.S. courts, the Court allowed a case alleging injuries from environmental pollution caused by a power plant that was funded and supervised by the IFC to proceed in a U.S. federal court. See id. at 1-2, 5-6. The Supreme Court held that international organizations are not immune from all suits, such as when those organizations are engaged in commercial activity. See id. at 4, 15. The Supreme Court’s decision now allows the case against the IFC to move forward in U.S. Federal Court in Washington D.C. Although the Supreme Court’s decision did not make a determination on the merits of the case, the Court’s holding opens the door in U.S. courts for other potential suits alleging wrongdoing committed by other international organizations. [Earthrights]
The circumstances at issue in the case began in 2008 when the IFC, an international organization headquartered in Washington D.C. that finances private-sector development projects, provided a loan to an energy company located in India for the construction of a coal-fired power plant in the Indian state of Gujarat. See Jam v. International Finance Corp., No. 17-1011, slip op. at 4-5 (U.S. Feb. 27, 2019). Based on the terms of the agreement, the IFC could revoke the loan if the energy company refused to comply with an environmental and social action plan that was intended to protect the area surrounding the plant from environmental damage. See id. at 5. However, despite an IFC internal audit finding that the plant construction and operation failed to comply with the environmental and social action plan, the IFC did not revoke the deal. See id. at 5.
In 2015, a group of Indian citizens, namely farmers and fishermen who live near the plant, as well as a local village, sued the IFC in Washington D.C. See id. at 5. The plaintiffs alleged that the pollution from the plant, including coal dust, ash, and water from the plant’s cooling system, harmed the air, land, and water around the plant. See id. at 6. The IFC objected to the suit, claiming that the U.S. International Organizations Immunities Act (IOIA) granted international organizations, like the IFC, virtually absolute immunity from suit in U.S. Courts. See id. The Federal District Court in Washington D.C. agreed with the IFC, finding that the IFC was immune from suit under the IOIA. See id. The plaintiff’s appealed to the Court of Appeals for the D.C. Circuit, which affirmed the District Court decision. The plaintiffs then proceeded to appeal to the U.S. Supreme Court. See id.
The Supreme Court’s Judgment
The issue in this case is whether the IOIA grants international organizations virtually absolute immunity from suit in U.S. Courts or whether there exist limited circumstances in which international organizations may be sued in the US. See id. at 1-2. The IOIA, enacted in 1945, prescribes that international organizations enjoy the “same immunity from suit . . . as is enjoyed by foreign governments.” See id. at 2-3. In 1945, foreign governments enjoyed “virtually absolute” immunity from suit. See id. at 3. However, subsequent developments in U.S. law, including the passage of the Foreign Sovereign Immunities Act, restricted the immunity of foreign government from suit, specifically removing immunity in cases where the foreign government engages in a “commercial activity that has a sufficient nexus with the United States.” See id. at 3-4. The question considered by the Supreme Court is whether the immunity granted by the IOIA is the same level of immunity that was granted to foreign governments back in 1945 when the IOIA was enacted, or whether the IOIA grants international organizations the same immunity currently afforded to foreign governments under the Foreign Sovereign Immunities Act. See id. at 6-7.
The Supreme Court found that the plain language of the IOIA granting international organizations “same immunity . . . as is enjoyed by foreign governments” does not appear to create a static level of immunity, but rather the IOIA “seems to continuously link the immunity of international organizations to that of foreign governments . . ..” See id. at 7. To further support this reading, the Court observed that IOIA employs “noncomparative language” in other provisions to establish fixed standards for other types of immunity. See id. Moreover, the Supreme Court notes that other statutes using similar linking language, such as the Civil Rights Act of 1866 and the Federal Tort Claims Act, have been read to evolve over time, rather than fixing the rights at the time of the passage of the act. See id. at 7-8. The Supreme Court concludes that the “natural” reading of the IOIA—confirmed using a well-established canon of interpretation—is that it grants international organizations the same level of immunity enjoyed today by foreign governments, which currently permits those governments to be sued in U.S. courts for certain commercial activities. See id. at 7, 9.
The Supreme Court rejected the IFC’s argument that the IOIA should not incorporate current developments in foreign sovereign immunity law because international organization immunity and sovereign immunity serve two distinct purposes. See id. at 8. The IFC contended that the purpose of sovereign immunity is to show mutual respect between two sovereigns, while international organization immunity is to allow those organizations to “freely pursue” the collective objectives of their Member States without interference. See id. The Court, however, found this unpersuasive, stating that the purpose of immunity for international organizations is not addressed in IOIA and therefore should not be considered in favor of a natural reading of the provision in question. See id. at 9.
The Supreme Court addressed concerns over the “flood of foreign-plaintiff litigation into U. S. courts” as a result of limiting the absolute immunity of international organizations, and concluded that such concerns are “inflated.” See id. at 14. The Court referenced some of the absolute immunity provisions articulated in many international organizations’ charters and, with respect to development banks, noted that “it is not clear that the lending activity of all development banks qualifies as commercial activity within the [Foreign Sovereign Immunities Act].” See id. at 14. Specifically, the Court noted that even if lending is commercial, the commercial activity must be shown to have a “sufficient nexus” to the U.S. and the suit must be “‘based upon’ either the commercial activity itself or acts performed in connection with the commercial activity.” See id. at 15. Despite holding that the IFC does not have near-complete immunity, the Supreme Court stated skepticism about the ability of this suit to proceed given that the alleged activity at issue concerns “tortious conduct” that may not satisfy the “based upon” requirement. See id. at 15.
Justice Breyer’s Dissent
In the only dissent of the case, Justice Stephen Breyer argues that the decision fails to give appropriate weight to the IOIA’s “history, its context, its purposes, and its consequences.” See id. at 1 (Breyer, J., dissenting). Breyer finds that the “purpose-based methods of interpretation” are important here to resolve ambiguous language in the IOIA. See id. Breyer considers the history of the objectives that the IOIA was intended to serve and finds that Congress intended to provide international organizations with very broad immunity from suit, in part to encourage those organizations to place their headquarters and carry out missions within the U.S. See id. at 7-11. Breyer concludes that the IOIA’s history and purpose strongly supports a static reading of the statute’s reference to foreign governments, and should thus grant virtually absolute immunity to international organizations. See id. at 11.
Implications of the Decision for International Organizations
Although the Jam decision does limit immunity for some international organizations, there are many organizations that will not be affected by the Supreme Court’s holding. For example, the United Nations and the Organization of American States still maintain absolute immunity from suit in the U.S. despite the Jam decision because they both have independent agreements with the U.S. ensuring absolute immunity from suit in the U.S. See Convention on Privileges and Immunities of the United Nations (17 September 1946); Headquarters Agreement Between the Organization of American States and the Government of the United States of America (signed 14 May 1992).
However, several international organizations headquartered in the U.S. and international organizations outside of the U.S. with some connection to the U.S. may be subject to suit if those organizations engage in certain forms of commercial activity that have a sufficient nexus with the U.S. [Earthrights] The organizations with the most U.S. contacts, particularly those with their headquarters in the U.S., such as the International Food Policy Research Institute or the Pan American Health Organization, may attempt to negotiate agreements with the U.S. to insulate them from liability.
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