Sunday, March 3, 2019
Human Rights activists cheered last week when in Jam v. International Finance Corporation, the US Supreme Court held that the International Finance Corporation (IFC) is subject to suit in the United States. The court found US jurisdiction under the International Organizations Immunities Act of 1945. International organizations have been found to have comparable jurisdictional immunity from suit in the US as foreign governments. While immunity is broad, it is not without limitations. Under the International Sovereign Immunity Act of 1976, one of the exceptions is when a government - or in this case an international organization - engages in commercial activities. "[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." As noted in the opinion, part of IFC's charter provides: 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." In that regard, the IFC supplements the work of the World Back Organization.
In Jam the IFC, headquartered in D.C. financed a coal-powered plant in India. The loan was made to Coastal Gujarat Power Ltd. The company is alleged to not have complied with social and environmental expectations for the project and IFO was alleged to have inadequately supervised the project. Local farmers and fishers complained of environmental pollution that has negatively changed the area air, water, and land. The IFO successfully argued immunity in the DC District Court. The SCOTUS ruling returns the case to the lower court for the matter to proceed. The opinion was 7-1 with Justice Bryer dissenting, largely noting that the majority's decision defines commercial activities too broadly and contrary to the act's intent. Justice Kavanaugh recused himself.
Human Rights activists cheered, led by EarthRights International and Stanford Law School's Supreme Court Litigation Clinic represented the Plaintiffs. Earthlink has at least one other case in the pipeline against IFC, including the case, Juana Doe et al v. IFC, involving "IFC projects that have been linked to murders, torture, and other violence by paramilitary groups and death squads in Honduras. EarthRights International represents the plaintiffs, whose identities are kept anonymous to protect them from retaliation."
Before Human Rights advocates begin drafting pleadings, it is worth considering other barriers to Jam and similar litigation. There are other jurisdictional requirements that Plaintiffs may not be able to overcome. As the court noted "[E]ven if an international development bank’s lending activity does qualify as commercial, that does not
mean the organization is automatically subject to suit." Plaintiffs must prove sufficient nexus to the United States and "In short, restrictive immunity hardly means unlimited exposure to suit for international organizations."
Nexus to the United States and tying harm suffered to the commercial activity will be the challenges for human rights advocates to overcome in Jam and other suits. Following the progress of Jam will be instructive. But for the moment, having experienced limitations in Jesner and Kiobel, Human Rights advocates should savor this victory in an era where Human Rights successes are harder to come by.