Jam v. Int'l Fin. Corp.

• Decision Date: 27 February 2019
• Docket Number: No. 17-1011,17-1011
• Citation: 203 L.Ed.2d 53,139 S.Ct. 759
• Parties: Budha Ismail JAM, et al., Petitioners v. INTERNATIONAL FINANCE CORPORATION
• Court: U.S. Supreme Court

139 S.Ct. 759

203 L.Ed.2d 53

Budha Ismail JAM, et al., Petitioners

v.INTERNATIONAL FINANCE CORPORATION

No. 17-1011

Supreme Court of the United States.

Argued October 31, 2018

Decided February 27, 2019

Argued by Jeffrey L. Fisher, Stanford, CA, for the petitioners, by Jonathan Ellis for the United States as amicus curiae, by special leave of the Court, supporting the petitioners, and by Donald B. Verrilli, Jr., Washington, DC, for the respondent.

Richard L. Herz, Marco B. Simons, Michelle C. Harrison, EarthRights, International, Washington, DC, Anton Metlitsky, Jennifer Sokoler, Samantha Goldstein, O’Melveny & Myers LLP, New York, NY, Jeffrey L. Fisher, Pamela S. Karlan, David T. Goldberg, Stanford, CA, Jason Zarrow, O’Melveny & Myers LLP, Washington, DC, for Petitioners.

Francis A. Vasquez, Jr., Dana Foster, Maxwell J. Kalmann, White & Case LLP, Washington, DC, Donald B. Verrilli, Jr., Ginger D. Anders, Christopher M. Lynch, Jonathan S. Meltzer, Munger, Tolles & Olson LLP, Washington, DC, for Respondent.

Chief Justice ROBERTS delivered the opinion of the Court.

The International Organizations Immunities Act of 1945 grants international organizations such as the World Bank and the World Health Organization the "same immunity from suit ... as is enjoyed by foreign governments."

22 U.S.C. § 288a(b). At the time the IOIA was enacted, foreign governments enjoyed virtually absolute immunity from suit. Today that immunity is more limited. Most significantly, foreign governments are not immune from actions based upon certain kinds of commercial activity in which they engage. This case requires us to determine whether the IOIA grants international organizations the virtually absolute immunity foreign governments enjoyed when the IOIA was enacted, or the more limited immunity they enjoy today.

Respondent International Finance Corporation is an international organization headquartered in the United States. The IFC finances private-sector development projects in poor and developing countries around the world. About 10 years ago, the IFC financed the construction of a power plant in Gujarat, India. Petitioners are local farmers and fishermen and a small village. They allege that the power plant has polluted the air, land, and water in the surrounding area. Petitioners sued the IFC for damages and injunctive relief in Federal District Court, but the IFC claimed absolute immunity from suit. Petitioners argued that the IFC was entitled under the IOIA only to the limited or "restrictive" immunity that foreign governments currently enjoy. We agree.

I

A

In the wake of World War II, the United States and many of its allies joined together to establish a host of new international organizations. Those organizations, which included the United Nations, the International Monetary Fund, and the World Bank, were designed to allow member countries to collectively pursue goals such as stabilizing the international economy, rebuilding war-torn nations, and maintaining international peace and security.

Anticipating that those and other international organizations would locate their headquarters in the United States, Congress passed the International Organizations Immunities Act of 1945, 59 Stat. 669. The Act grants international organizations a set of privileges and immunities, such as immunity from search and exemption from property taxes. 22 U.S.C. §§ 288a(c), 288c.

The IOIA defines certain privileges and immunities by reference to comparable privileges and immunities enjoyed by foreign governments. For example, with respect to customs duties and the treatment of official communications, the Act grants international organizations the privileges and immunities that are "accorded under similar circumstances to foreign governments." § 288a(d). The provision at issue in this case provides that international organizations "shall enjoy the same immunity from suit and every form of judicial process as is enjoyed by foreign governments." § 288a(b).

The IOIA authorizes the President to withhold, withdraw, condition, or limit the privileges and immunities it grants in light of the functions performed by any given international organization. § 288. Those privileges and immunities can also be expanded or restricted by a particular organization’s founding charter.

B

When the IOIA was enacted in 1945, courts looked to the views of the Department of State in deciding whether a given foreign government should be granted immunity from a particular suit. If the Department submitted a recommendation on immunity, courts deferred to the recommendation. If the Department did not make a recommendation, courts decided for themselves whether to grant immunity, although they did so by reference to State Department policy. Samantar v. Yousuf , 560 U.S. 305, 311–312, 130 S.Ct. 2278, 176 L.Ed.2d 1047 (2010).

Until 1952, the State Department adhered to the classical theory of foreign sovereign immunity. According to that theory, foreign governments are entitled to "virtually absolute" immunity as a matter of international grace and comity. At the time the IOIA was enacted, therefore, the Department ordinarily requested, and courts ordinarily granted, immunity in suits against foreign governments. Ibid . ; Verlinden B. V. v. Central Bank of Nigeria , 461 U.S. 480, 486, 103 S.Ct. 1962, 76 L.Ed.2d 81 (1983).¹

In 1952, however, the State Department announced that it would adopt the newer "restrictive" theory of foreign sovereign immunity. Under that theory, foreign governments are entitled to immunity only with respect to their sovereign acts, not with respect to commercial acts. The State Department explained that it was adopting the restrictive theory because the "widespread and increasing practice on the part of governments of engaging in commercial activities" made it "necessary" to "enable persons doing business with them to have their rights determined in the courts." Letter from Jack B. Tate, Acting Legal Adviser, Dept. of State, to Acting Attorney General Philip B. Perlman (May 19, 1952), reprinted in 26 Dept. State Bull. 984–985 (1952).

In 1976, Congress passed the Foreign Sovereign Immunities Act. The FSIA codified the restrictive theory of foreign sovereign immunity but transferred "primary responsibility for immunity determinations from the Executive to the Judicial Branch." Republic of Austria v. Altmann , 541 U.S. 677, 691, 124 S.Ct. 2240, 159 L.Ed.2d 1 (2004) ; see 28 U.S.C. § 1602. Under the FSIA, foreign governments are presumptively immune from suit. § 1604. But a foreign government may be subject to suit under one of several statutory exceptions. Most pertinent here, a foreign government may be subject to suit in connection with its commercial activity that has a sufficient nexus with the United States. § 1605(a)(2).

C

The International Finance Corporation is an international development bank headquartered in Washington, D. C. The IFC is designated as an international organization under the IOIA. Exec. Order No. 10680, 3 C.F.R. 86 (1957); see 22 U.S.C. §§ 282, 288. One hundred eighty-four countries, including the United States, are members of the IFC.

The IFC is charged with furthering economic development "by encouraging the growth of productive private enterprise in member countries, particularly in the less developed areas, thus supplementing the activities of" the World Bank. Articles of Agreement of the International Finance Corporation, Art. I, Dec. 5, 1955, 7 U.S.T. 2193, T. I. A. S. No. 3620. Whereas the World Bank primarily provides loans and grants to developing countries for public-sector projects, the IFC finances private-sector development projects that cannot otherwise attract capital on reasonable terms. See Art. I(i), ibid . In 2018, the IFC provided some $ 23 billion in such financing.

The IFC expects its loan recipients to adhere to a set of performance standards designed to "avoid, mitigate, and manage risks and impacts" associated with development projects. IFC Performance Standards on Environmental and Social Sustainability, Jan. 1, 2012, p. 2, ¶1. Those standards are usually more stringent than any established by local law. The IFC includes the standards in its loan agreements and enforces them through an internal review process. Brief for Respondent 10.

In 2008, the IFC loaned $ 450 million to Coastal Gujarat Power Limited, a company located in India. The loan helped finance the construction of a coal-fired power plant in the state of Gujarat. Under the terms of the loan agreement, Coastal Gujarat was required to comply with an environmental and social action plan designed to protect areas around the plant from damage. The agreement allowed the IFC to revoke financial support for the project if Coastal Gujarat failed to abide by the terms of the agreement.

The project did not go smoothly. According to the IFC’s internal audit, Coastal Gujarat did not comply with the environmental and social action plan in constructing and operating the plant. The audit report criticized the IFC for inadequately supervising the project.

In 2015, a group of farmers and fishermen who live near the plant, as well as a local village, sued the IFC in the United States District Court for the District of Columbia. They claimed that pollution from the plant, such as coal dust, ash, and water from the plant’s cooling system, had destroyed or contaminated much of the surrounding air, land, and water. Relying on the audit report, they asserted several causes of action against the IFC, including negligence, nuisance, trespass, and breach of contract. The IFC maintained that it was immune from suit under the IOIA and moved to dismiss for lack of subject matter jurisdiction.

The District Court, applying D. C. Circuit precedent, concluded that the IFC was immune from suit because the IOIA grants international organizations the virtually absolute immunity that foreign governments enjoyed when the IOIA was enacted. 172 F.Supp.3d 104, 108–109 (DC 2016) (citing Atkinson v....