SCOTUS Clarifies Immunity for International Organizations in Jam v International Finance Corp

In Jam v International Finance Corp, 586 U. S. ____ (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.

Facts of Jam v International Finance Corp

In 1945, Congress passed the International Organizations Immunities Act (IOIA), which, among other things, grants international organizations the “same immunity from suit . . . as is enjoyed by foreign governments.” At that time, foreign governments were entitled to virtually absolute immunity as a matter of international grace and comity. In 1952, the State Department adopted a more restrictive theory of foreign sovereign immunity, which Congress subsequently codified in the Foreign Sovereign Immunities Act (FSIA). The FSIA gives foreign sovereign governments presumptive immunity from suit, subject to several statutory exceptions, including an exception for actions based on commercial activity with a sufficient nexus with the United States.

Respondent International Finance Corporation (IFC), an IOIA international organization, 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. Petitioners sued the IFC, claiming that pollution from the plant harmed the surrounding air, land, and water. The District Court, however, held that the IFC was immune from suit because it enjoyed the virtually absolute immunity that foreign governments enjoyed when the IOIA was enacted. The D.C. Circuit affirmed in light of its decision in Atkinson v. Inter-American Development Bank, 156 F. 3d 1335 (1998).

Court’s Decision in Jam v. International Finance Corp

The Supreme Court reversed by a vote of 7-1, holding that international organizations are entitled to the “same immunity” from suits that foreign governments enjoy today. Chief Justice John Roberts wrote on behalf of the majority, which included Justices Thomas, Ginsburg, Alito, Sotomayor, Kagan, and Gorsuch.

According to the majority, the language of the IOIA more naturally lends itself to its interpretation. As the Chief Justice explained:

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 be- tween 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.

The Court also concluded that its reading is confirmed by the “reference canon” of statutory interpretation. Under that canon, “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.”

As the Chief Justice noted, federal courts have often relied on the reference canon to harmonize a statute with an external body of law that the statute refers to generally. “The IOIA’s reference to the immunity enjoyed by foreign governments is a general rather than specific reference. The reference is to an external body of potentially evolving law—the law of foreign sovereign immunity—not to a specific provision of another statute,” Chief Justice Roberts explained. “The IOIA should therefore be understood to link the law of international organization immunity to the law of foreign sovereign immunity, so that the one develops in tandem with the other.”

The Court rejected the IFC’s contention 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. The Court acknowledged that this would be particularly true with respect to international development banks, which use the tools of commerce to achieve their objectives. However, it found that those concerns are inflated.

“[T]he privileges and immunities accorded by the IOIA are only default rules,” Roberts wrote. “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.” The Chief Justice also highlighted that even if the organization’s lending activity does qualify as commercial, that does not mean the organization is automatically subject to suit, since other FSIA requirements must also be satisfied.