Immunity (International Organization)

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) |
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

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