Osseiran v. International Finance Corp.

• Decision Date: 13 January 2009
• Docket Number: No. 07-7122.,07-7122.
• Citation: 552 F.3d 836
• Parties: Salah N. OSSEIRAN, Appellee v. INTERNATIONAL FINANCE CORPORATION, Appellant.
• Court: U.S. Court of Appeals — District of Columbia Circuit

552 F.3d 836

Salah N. OSSEIRAN, Appellee v. INTERNATIONAL FINANCE CORPORATION, Appellant.

No. 07-7122.

United States Court of Appeals, District of Columbia Circuit.

Argued September 9, 2008.

Decided January 13, 2009.

Appeal from the United States District Court for the District of Columbia (No. 06cv00336).

Francis A. Vasquez Jr., argued the cause for appellant. With him on the briefs was Frank Panopoulos.

Michael Joseph argued the cause and filed the brief for appellee. With him on the brief was Alex Blanton. Joseph O. Click entered an appearance.

Before RANDOLPH, ROGERS and TATEL, Circuit Judges.

Opinion for the Court filed by Circuit Judge RANDOLPH.

RANDOLPH, Circuit Judge:

The International Finance Corporation is a global institution with 178 member states, including the United States. It invests in private enterprises in developing nations. Its charter states that it "shall seek to revolve its funds by selling its investments to private investors whenever it can appropriately do so on satisfactory terms." Articles of Agreement of the International Finance Corporation, art. 6, § 3(vi), Dec. 5, 1955, 7 U.S.T. 2197, T.I.A.S. No. 3620 ("IFC Charter"). Salah N. Osseiran, a Lebanese businessman, sought to purchase one of International Finance's investments. When the deal soured, Osseiran sued International Finance. The question on appeal is whether the International Finance Corporation is immune from the suit.

In September 2005, Osseiran approached Jan van Bilsen, International Finance's portfolio manager for the Middle East. Osseiran wanted to buy International Finance's 11 percent stake in the Middle East Capital Group, a Guernsey corporation headquartered in Beirut, Lebanon. At the time, Osseiran was a minority shareholder in the Capital Group. In an October 3, 2005, email to van Bilsen, Osseiran offered to purchase the shares and requested confidentiality for his offer. The parties then began negotiating the terms of the proposed sale, primarily through email and telephone exchanges. Two months of bargaining culminated in van Bilsen sending Osseiran a draft sales agreement on November 26. The November agreement set forth the purchase price, payment terms, and warranties. It also stated that the parties intended to be contractually bound only upon execution of the document; van Bilsen noted that International Finance reserved the right to modify the terms. On December 1, Osseiran responded that the agreement was "generally Ok" and proposed some changes. Salah N. Osseiran Decl., Feb. 26, 2006, Ex. D. At this point the parties' accounts diverge. Despite Osseiran's entreaties, International Finance declined to sign the draft agreement. On or before February 16, 2006, Osseiran learned that International Finance intended to sell its shares to a higher bidder.

Osseiran's amended complaint was in three counts. Count 1 alleged that the November agreement was a binding contract and that International Finance breached it. Count 2 alleged that International Finance knew Osseiran planned to acquire a controlling interest in the Middle East Capital Group, that he bought out other shareholders in reliance on International Finance's "promise to sell" him its shares, and that International Finance is therefore estopped from reneging and selling the shares to another party. Count 3 alleged breach of confidentiality on the basis that International Finance agreed to keep its discussions with Osseiran secret but then divulged them.

International Finance moved to dismiss on the grounds that it was immune from suit under the International Organizations Immunities Act, 22 U.S.C. §§ 288-288f, and that the complaint failed to state a cause of action. The district court held that International Finance had waived its immunity, but granted the motion to dismiss the breach of contract count pursuant to Federal Rule of Civil Procedure 12(b)(6).¹ Osseiran v. Int'l Fin. Corp., 498 F.Supp.2d 139, 142 (D.D.C.2007). We have appellate jurisdiction over International Finance's interlocutory appeal from the denial of its immunity claim with respect to Count 2 (promissory estoppel) and Count 3 (confidentiality). See, e.g., Rendall-Speranza v. Nassim, 107 F.3d 913, 916 (D.C.Cir.1997).

The International Organizations Immunities Act applies to those international organizations which the President designates as entitled to the benefits of the Act. Section 2(b) states that such organizations "shall enjoy the same immunity from suit and every form of judicial process 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). Among the protected institutions are the International Monetary Fund, the World Bank, and the World Trade Organization. 22 U.S.C. § 288 (historical note).

In 1956, President Eisenhower conferred the benefits of the Act on the International Finance Corporation, subject to any limitations contained in the corporation's charter. Exec. Order No. 10,680, 21 Fed.Reg. 7,647 (Oct. 2, 1956). A section of the charter entitled "Position of the Corporation with Regard to Judicial Process" states:

Actions may be brought against the Corporation only in a court of competent jurisdiction in the territories of a member in which the Corporation has an office, has appointed an agent for the purpose of accepting service or notice of process, or has issued or guaranteed securities. No actions shall, however, be brought by members or persons acting for or deriving claims from members. The property and assets of the Corporation shall, wheresoever located and by whomsoever held, be immune from all forms of seizure, attachment or execution before the delivery of final judgment against the Corporation.

IFC Charter art. 6, § 3(vi). The provision carries "full force and effect in the United States" by virtue of the International Finance Corporation Act, 22 U.S.C. § 282g, which executes United States membership in the corporation.

The waiver language just quoted is identical to that appearing in the charter of the International Finance Corporation's parent entity, the World Bank, and is common in the charters of other international financial institutions. See Restatement (Third) of Foreign Relations Law § 467 reporter's note 3 (1987). We first considered a charter with this language in Lutcher S.A. Celulose e Papel v. Inter-Am. Dev. Bank, 382 F.2d 454, 457 (D.C.Cir.1967), which held that, through this language, the defendant bank waived immunity from a debtors' suit to enforce a loan agreement.

There followed Mendaro v. World Bank, 717 F.2d 610 (D.C.Cir.1983), and Atkinson v. Inter-Am. Dev. Bank, 156 F.3d 1335 (D.C.Cir.1998). The question in Mendaro was whether the World Bank had immunity from a former employee's sexual harassment and discrimination suit. Although the waiver provision contained no exceptions for different types of suit, the court read a qualifier into it. The court reasoned that an organization would not give up immunity unless it would gain a "corresponding benefit which would further the organization's goals." Mendaro, 717 F.2d at 617. A waiver of immunity "with respect to the World Bank's commercial transactions with the outside world" made sense, the court thought, because otherwise private parties would be hesitant to transact business with the Bank. Id. at 618. The court thought language in the charter indicated that the waiver of immunity, like immunity itself, was meant to aid the Bank in accomplishing its mission.² Id. The court went on to hold that the World Bank had not waived its immunity from its employee's suit because the potential benefit of attracting qualified staff was offset by the Bank's employee grievance process and outweighed by the disruption to its labor practices. Id. at 619 n. 56; see also Atkinson, 156 F.3d at 1338.

In Atkinson, the court considered another claim related to an international organization's internal affairs. The court held that the Inter-American Development Bank had not waived its immunity from an action to garnish one of its employee's wages in order to satisfy a divorce judgment. Atkinson, 156 F.3d at 1338-39. Waiver of immunity from such actions would yield the Bank no conceivable benefit. Id. at 1338. In so holding the court stated that if waiver of immunity from a "particular type of suit would further the [organization's] objecti...