Supreme Court denies international organization absolute immunity from lawsuits
February 27, 2019
The US Supreme Court on Tuesday denied the International Finance Corporation (IFC), an international organization, “absolute immunity” from lawsuits in the US.
About 10 years ago, IFC, an IOIA international organization, entered into a loan agreement with an Indian company to finance the construction of a coal-fired power plant in Gujarat. Local farmers, fishermen and a small village sued the IFC, seeking injunction relief, claiming that pollution from the plant harmed the surrounding air, land and water.
The IOIA of 1945 grants international organizations the same immunity from suit, virtually absolute immunity, as is enjoyed by foreign governments. The FSIA 1952 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 US. The court admits that under the rules applicable in 1945, the extent of immunity from suit was virtually absolute. However, under the rules applicable today, it is more limited.
The court reasoned that the international organization immunity and the foreign sovereign immunity are equivalent. The IOIA’s reference to the immunity enjoyed by foreign governments is to an external body of potentially evolving law, and its scope and content should be given only by reference to the rules governing foreign sovereign immunity. The court rejected the IFC’s concern that interpreting the IOIA immunity provision to grant only restrictive immunity would defeat the purpose of granting the clause. “This concern is inflated.”
The court held that the IOIA of 1945 affords international organizations the same immunity from suit that foreign governments enjoy today under the FSIA of 1976.