On February 27, 2019, the U.S. Supreme Court held that

the International Organizations Immunities Act of 1945 affords international organizations the same immunity from suit that foreign governments enjoy today under the Foreign Sovereign Immunities Act of 1976. Jam et al. v. International Finance Corporation 586 U.S. __ (2019).

This means that their immunity is not absolute and the international organizations may be called to answer in mass tort and class action lawsuits before U.S. courts.

By way of background. The International Organizations Immunities Act (IOIA) granted international organizations the “same immunity from suit . . . as is enjoyed by foreign governments.” 22 U. S. C. §288a(b). Under the IOIA, foreign governments were entitled to virtually absolute immunity as a matter of international grace and comity.

Later, the U.S. Congress adopted the Foreign Sovereign Immunities Act (FSIA), 28 U. S. C. §1602, which gives foreign sovereign governments presumptive immunity from suit. This immunity is not absolute and is subject to several statutory exceptions, including an exception for actions based on commercial activity with a sufficient nexus with the United States (§1605(a)(2)).

In the case at hand, the Respondent – International Finance Corporation (IFC), an international organization covered under the FSIA – entered into a loan agreement with a company based in India, to finance the construction of a coal-fired power plant in Gujarat. Petitioners sued the IFC, claiming that pollution from the plant harmed the surrounding air, land, and water.

The District Court held that the IFC was immune from suit because it enjoyed the same virtually absolute immunity that foreign governments enjoyed when the IOIA was enacted.

However, the U.S. Supreme Court reversed and remanded the District Court decision, opining that “the IOIA affords international organizations the same immunity from suit that foreign governments enjoy today under the FSIA.”

The IFC contended that “interpreting the IOIA immunity provision to grant only restrictive immunity would defeat the purpose of granting immunity in the first place, by subjecting international organizations to suit under the commercial activity exception of the FSIA for most or all of their core activities. This would be particularly true with respect to international development banks, which use the tools of commerce to achieve their objectives.”

The Court disagreed and held that – just like foreign countries – international organizations can be sued before U.S. courts when they are acting as private players in the market.

“The IOIA’s reference to the immunity enjoyed by foreign governments is to an external body of potentially evolving law, not to a specific provision of another statute. Nor is it a specific reference to a common law concept with a fixed meaning. The phrase “immunity enjoyed by foreign governments” is not a term of art with substantive content but rather a concept that can be given scope and content only by reference to the rules governing foreign sovereign immunity.” Pp. 9–11.

As for IFC’s concern, the Supreme Court replied that “An international organization’s charter can always specify a different level of immunity, and many do. Nor is it clear that the lending activity of all development banks qualifies as commercial activity within the meaning of the FSIA. But even if it does qualify as commercial, that does not mean the organization is automatically subject to suit, since other FSIA requirements must also be met.”

Jam et al. v. International Finance Corporation 586 U.S. __ (2019) is available at https://www.scotusblog.com…

For more information, Francesca Giannoni-Crystal and Federica Romanelli