Immunity (International Organization)

• Pages: 32-35

32 Volume 23, April–June 2017 international law update

© 2017 International Law Group, LLC. All rights reserved. ISSN 1089-5450, ISSN 1943-1287 (on-line) | www.internationallawupdate.com

IMMUNITY

(INTERNATIONAL

ORGANIZATION)

District of Columbia Circuit affirms

dismissal of lawsuit by Indian nationals

who claim to be beneficiaries of social

and environmental terms of contract

of International Finance Corporation

(IFC) with large Indian company

Appellants, a group of Indian nationals,

challenge a district court decision dismissing

their complaint against the International Finance

Corporation (IFC) on grounds that the IFC is

immune from their suit. Appellants are f‌ishermen,

farmers, a local government entity, and a trade

union of f‌ish workers. e IFC, headquartered in

Washington, is an international organization which

provides loans in the developing world to projects that

cannot command private capital. e IFC loaned

$450 million to Coastal Gujarat Power Limited, a

subsidiary of Tata Power, an Indian company, for

construction and operation of the Tata Mundra

Plant. e loan agreement, in accordance with

IFC’s policy to prevent social and environmental

damage, included an Environmental and Social

Action Plan designed to protect the surrounding

communities. According to the IFC’s own internal

audit conducted by its ombudsman, the plant’s

construction and operation did not comply with

the Plan. Yet the IFC did not take any steps to force

the loan recipients into compliance with the Plan.

e appellants’ claims are almost entirely based on

tort: negligence, negligent nuisance, and trespass.

ey do, however, raise a related claim as alleged

third party contract benef‌iciaries of the social and

environmental terms of the contract.

e IFC relies on the International

Organizations Immunities Act (IOIA), which

provides that international organizations “shall enjoy

the same immunity from suit. . . as is enjoyed by

foreign governments, except to the extent that such

organizations may expressly waive their immunity

for the purpose of any proceedings or by the terms of

any contract.” 22 U.S.C. § 288a(b). e IFC has been

designated an international organization entitled

to the “privileges, exemptions, and immunities”

conferred by the statute. Exec. Order No. 10,680,

21 Fed. Reg. 7,647 (Oct. 5, 1956).

In response to IFC claim of statutory

entitlement appellants argue that leading case

of Atkinson v. Inter-Am. Dev. Bank, 156 F.3d

1335 (D.C. Cir. 1998), should not be followed.

In the case of Atkinson it was held that foreign

organizations receive the immunity that foreign

governments enjoyed at the time the IOIA was

passed and that immunity is not diminished

even if the immunity of foreign governments

has been subsequently modif‌ied, particularly by

the widespread acceptance and codif‌ication of

a “commercial activities exception” to sovereign

immunity. Attacking Atkinson, appellants make

two related contentions. First, Atkinson was wrong

to conclude that when Congress tied the immunity

of international organizations to foreign sovereigns,

it meant the immunity foreign sovereigns enjoyed

in 1945. Appellants argue that even assuming

foreign sovereigns enjoyed absolute immunity

in 1945, if that immunity diminished, as it has

with the codif‌ication of the commercial activity

exception, Congress intended that international

organizations fare no better. However, Atkinsons

explicitly rejected such an evolving notion of

international organization immunity. Appellate

Court expressed that while considering legislation

Congress rejected a commercial activities exception.

However, the issue with this argument is that it

runs counter to Atkinson’s holding, which explicitly

rejected such an evolving notion of international

organization immunity. Further Congress

delegated the responsibility of change in immunity

to International Organizations to President.

Appellants next argued that Appellate Court can,

and should, bypass its precedential impact because

the Supreme Court has undermined its premise