November 11, 2019Client Alert

No Blanket Immunity for International Organizations

In a 7-1 vote reversing a decision by the D.C. Circuit, the Supreme Court in Jam v. International Finance Corp. (case number 17-1011) recently held that the International Organizations Immunities Act (IOIA) does not completely immunize international organizations from lawsuits in the United States.[1]  The Court concluded that the IOIA provides international organizations with only that level of immunity that foreign governments enjoy, which is not absolute.

When passed by Congress in 1945, the IOIA provided foreign governments with near blanket immunity against lawsuits in the United States.  Decades later, however, Congress enacted the Foreign Sovereign Immunities Act (FSIA), which created an exception that made foreign governments potentially liable for certain “commercial activities.”  Writing for the majority, Chief Justice Roberts explained that it was the intent of Congress under the IOIA to “ensure ongoing parity” between international organizations and foreign governments by inextricably linking the immunity afforded to each.

The Plaintiffs in Jam v. International Finance Corp. included Indian farmers and fishermen who alleged that the Tata Mundra Power Plant, in Gujarat, India caused widespread water contamination that damaged the environment and their livelihoods.  According to Plaintiffs, this damage would have been avoided if the International Finance Corp., which financed the project, had fulfilled its obligations of ensuring compliance with the requirements of the funding agreements and its own regulations.  The International Finance Corp., of which the United States is a member nation, is a unit of the World Bank Group.   

Concerned that the majority’s decision created tremendous uncertainty, Justice Breyer envisaged in his dissenting opinion the filing of countless lawsuits in the United States against international organizations involved in finance.  Chief Justice Roberts, however, concluded that this risk was overstated given that it remained unclear whether financing even qualified as a “commercial activity” under the FSIA and IOIA.  The Chief Judge further noted that there must be a “sufficient nexus” between the United States and a qualifying “commercial activity” that constituted the “gravamen” of any such lawsuit. 

[1] Because he had considered the case as a judge at the D.C. Circuit, Justice Kavanaugh did not participate in the decision. 

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