Case of the Day: Jam v. International Finance Corp.
Posted on June 26, 2017
The case of the day is Jam v. International Finance Corp. (D.C. Cir. 2017). Budha Ismail Jam and the other plaintiffs were fishermen and farmers who lived near Gujarat, India. Tata Power, an Indian utility company, built the Tata Mundra Power Plant nearby. The project was financed with a $450 million loan from the IFC, an international organization based in Washington. The claim was that the IFC had allowed the project to go forward even though the plant did not do everything it was supposed to do to limit social and environmental damage. The plaintiffs said that the power plant had devastated their way of life. They sued in Washington, and the IFC moved to dismiss on the grounds of immunity from suit under the International Organizations Immunities Act.
The DC Circuit’s precedent, Atkinson v. Inter American Development Bank, 156 F.3d 1335 (D.C. Cir. 1998), construes the IOIA to mean that international organizations should have the same immunity that foreign states had at the time the IOIA was enacted in 1945. At that time, before the Tate Letter, foreign states enjoyed near absolute immunity. The plaintiffs claimed Atkinson was wrongly decided and should not be followed. But the court, as was to be expected, rejected this argument. It noted that although the decision whether to file a suggestion of immunity was made by the State Department, in practice the State Department essentially always did so upon request.
The plaintiffs also argued that the IFC had waived its immunity in its charter, which provides:
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.
Unfortunately for the plaintiffs, the court had previously construed identical language in the World Bank charter to “allow only the type of suit by the type of plaintiff that “would benefit the organization over the long term.” Mendaro v. World Bank, 717 F.2d 610 (D.C. Cir. 1983):
The Mendaro test instead focused on identifying those transactions where the other party would not enter into negotiations or contract with the organization absent waiver. Mendaro provided examples: suits by debtors, creditors, bondholders, and those other potential plaintiffs to whom the [organization] would have to subject itself to suit in order to achieve its chartered objectives.
The claims here were not this kind of claim, but instead claims relating to the internal workings of the IFC, and so they were barred.
Judge Pillard, concurring, agreed that the Circuit’s prior precedents were binding but suggested that they should be revisited. I won’t review her reasoning here, but I suspect we haven’t seen the last of the case. The concurrence is an invitation to a petition for a rehearing en banc.