[Rishi Gulati is a LSE Fellow in Law at the London School of Economics and a Barrister at the Victorian Bar.]
The US Supreme Court has delivered its much awaited judgment in Jam v. International Finance Corporation, No. 17-1011, 27 February 2019 (‘Jam’ or the ‘Decision’. Two detailed posts by the author containing an analysis of the decisions of the courts below are here and here. In short, the International Finance Corporation (IFC), an international organization (IO) entered into a loan agreement with Coastal Gujarat Power Limited, a company based in India, to finance the construction of a coal-fired power plant in Gujarat. The plaintiffs sued the IFC in a US Federal District Court asserting that pollution from the plant harmed the surrounding air, land, and water. The District Court found that the IFC was absolutely immune under the US International Organisations Immunities Act 1945 (IOIA). The D C Circuit affirmed that decision, relying on Atkinson v Inter-American Development Bank, 156 F. 3d 1335.
The IOIA grants international organizations the ‘same immunity from suit…as is enjoyed by foreign governments’ (22 U. S. C. §288a(b). The central issue in Jam concerned how the IOIA standard of immunity is to be interpreted. Should it be equated with absolute immunity for states enjoyed virtually absolute immunity when the IOIA was enacted. Or should the IOIA standard of immunity be interpreted with reference to the restrictive immunity standard (immunity exists only with respect to non-commercial or public acts). This latter standard is now enshrined in the US Foreign State Immunities Act 1976 (s 1605(a)(2), FSIA).
By seven votes to one (with Breyer J dissenting) the US Supreme Court has now given a definitive answer. The majority of the court adopted the reference canon of statutory interpretation in respect of the IOIA: ‘when a statute refers to a general subject, the statute adopts the law on that subject as it exists whenever a question under the statute arises’ (p. 12). The Supreme Court thus concluded that the IOIA grants immunity with reference to the FSIA standard of immunity. It was said:
In granting international organizations the “same immunity” from suit “as is enjoyed by foreign governments,” the Act seems to continuously link the immunity of international organizations to that of foreign governments, so as to ensure ongoing parity between the two. The statute could otherwise have simply stated that international organizations “shall enjoy absolute immunity from suit,” or specified some other fixed level of immunity. Other provisions of the IOIA, such as the one making the property and assets of international organizations “immune from search,” use such noncomparative language to define immunities in a static way…Or the statute could have specified that it was incorporating the law of foreign sovereign immunity as it existed on a particular date…Because the IOIA does neither of those things, we think the “same as” formulation is best understood to make international organization immunity and foreign sovereign immunity continuously equivalent (pp. 9-10).
IO immunities under the IOIA have now remarkably been limited. The Decision will have reverberations around the world. Much will be written about Jam over the coming days, months and years. Let me make just three initial observations.
1 What does Jam mean for IOs?
There is no doubt that Jam will instil real dread amongst IOs. Used to enjoying virtually absolute immunity, even where wrongful conduct is immediately apparent (including in Jam where the IFC’s own accountability mechanism had found fault on part of the IFC), IOs will need to consider whether a claim raised against it is commercial or non-commercial? If the former, then immunity will not apply, at least in the US. Indeed, the IFC argued that most of its work of entering into loan agreements with private corporations was likely commercial activity; and the very grant of immunities becomes meaningless if it can be sued in respect of claims arising out of its core lending activities (p. 15). Roberts CJ dismissed the IFC’s concerns saying:
The IFC’s concerns are inflated. To begin, the privileges and immunities accorded by the IOIA are only default rules. If the work of a given international organization would be impaired by restrictive immunity, the organization’s charter can always specify a different level of immunity. The charters of many international organizations do just that…Notably, the IFC’s own charter does not state that the IFC is absolutely immune from suit (pp. 17-8).
Despite the above remarks, treaty amendment is a difficult process. Clearly, a real dent in IO immunities has now been made. This much is undeniable.
|Period||1 Mar 2019|