In the wake of the US Supreme Court’s surprise ruling in Jam v IFC,1 the corridors of the World Bank echo with metaphors of alarm. Chief Justice Roberts, joined by six Associate Justices (with Justice Stephen Breyer in lonely dissent), have opened Pandora’s Box, tipping out cats onto pigeons and sending an applecart rolling to an untidy fate. The decision opens the door to litigation in the US against international organisations (“IOs”) as long as the claim relates to “commercial” activities. In the long term, IOs may be able to use their constituent instruments to override the result in Jam, or even persuade the US Courts to narrow the “commercial” gateway in immunities law. For now, in the changed landscape, IOs with connections to the US and their stakeholders need to consider: what are the consequences of Jam, and how are IOs with headquarters elsewhere – e.g. in the UK – faring on similar issues? We deal with these questions below.
THE RULING IN JAM V IFC
In Jam v IFC, a group of local farmers from Gujarat, India, seek to sue the International Finance Corporation (“IFC”) – one of the five bodies which make up the World Bank family of IOs – for environmental harms suffered when the IFC financed the development of a coal-fired power plant. Internal investigations within the World Bank group have criticised the project for failing to apply the Bank’s own environmental and social safeguards.2 The IFC invoked the immunity from legal process conferred by s2(b) of the US International Organizations Immunities Act (“IOIA”), and under its own articles of agreement (often referred to as its “charter”; the articles are an international treaty). The US government has listed the World Bank family as IOs protected by IOIA, but with the proviso that the IOIA does not create any additional immunity beyond what the IOs’ charters require. As a result, the World Bank’s immunity from suit can depend both on the interpretation of the IOIA and on the interpretation of the charter wording – which judges have disparaged as “hardly a model of clarity”3 and “clumsy and inartfully drafted”.4
Earlier US cases, such as Lutcher5 and Mendaro,6 had focused on the charter wording as creating a “charter-based waiver,” whose scope was debatable. On its face, the World Bank’s charter would appear to remove all immunity except in respect of claims by member states and pre-judgment attachment of assets. Article VII.3 of its charter provides that it may be sued “only in a court of competent jurisdiction in the territories of a member in which the Bank has an office, has appointed an agent for the purpose of accepting service or notice of process, or has issued or guaranteed securities,” that “[n]o actions shall ... be brought by members [i.e. states]” and that the Bank’s property is immune from seizure “before the delivery of final judgment against the Bank”. Article VI.3 of the IFC’s charter is identically worded. Despite this facially broad waiver of immunity, however, the US Court of Appeals for the District of Columbia Circuit (“DC Circuit”) in Mendaro held that the World Bank’s charter only intended to waive immunity insofar as waiver would promote the World Bank’s objectives.7 On that basis, the DC Circuit has found immunity waived for claims by creditors and borrowers,8 but not for ‘internal’ disputes such as workplace claims by employees.9
But the focus on “charter-based waiver” appears to have been somewhat misjudged. As the DC Circuit had overlooked in Mendaro,10 but awoke to in Atkinson v. InterAmerican Development Bank,11 logically, the meaning of the IOIA is the first hurdle that an IO must overcome: if the immunity which the IOIA confers does not cover the facts in question, the issue of whether such immunity has been waived falls away.
The Jam case raised this issue in an acute form. In the light of Mendaro’s narrowing of the facially broad wording of Article VI.3 of the IFC charter, the “charter-based waiver” might well be construed as not waiving immunity over an environmental tort case (although there is no close precedent either way). Hence, the Indian plaintiffs’ ability to bring their claim rested on the true scope of immunity under the IOIA.
Here, the conundrums of interpreting the IOIA begin. Section 2(b) of the IOIA provides that IOs “shall enjoy the same immunity from suit . . . as is enjoyed by foreign governments” 22 U.S.C. § 288a(b). When the US Congress passed the IOIA in 1945, foreign states enjoyed virtually absolute immunity under prevailing international law and US practice. But, in 1952, the US State Department adopted a “restrictive theory” of state immunity, whereby foreign sovereigns did not enjoy immunity in disputes arising from “commercial” activities. The US Foreign