Supreme Court of the United States Limits Immunity for International Groups
The highest court in the land’s recent ruling has opened American-based international organizations to lawsuits, according to an Insurance Journal article. The Supreme Court of the United States has held that a World Bank affiliate must defend allegations against it claiming it is legally responsible for environmental damage caused by an India power plant.
The lawsuit, Jam v. International Finance Corp., alleges inadequate supervision of the India-based power plant’s construction after the defendant International Finance Corp. (IFC) provided a $450 million loan for its construction. IFC is the World Bank’s private sector lending arm. The plaintiffs suing the IFC include local Indian fishermen and farmers.
A federal law from 1945 states international organizations are granted the same immunity as foreign countries. A 1976 law, however, states that foreign governments do not receive the benefit of immunity when they are involved in commercial dealings. The latter law makes no mention of international organizations. The central issue before the SCOTUS was how the 1976 provision affected, if at all, the 1945 law.
The SCOTUS’s Decision
In a 7-1 decision, the court ruled that sovereign immunity does not protect United States-based international organizations when the company is involved in commercial activities. The effect of the decision is that new legal liability could fall on the IFC and other multilateral development banks. The SCOTUS ruling does not affect neither the International Monetary Fund (IMF) nor the European Union (EU); in fact, both entities have complete sovereign immunity from lawsuits under the terms of their charters.
Chief Justice John Roberts, writing for the majority, noted the 1976 law changed not just the immunity posses by foreign governments involved in commercial activities, but also international organizations doing the same type of business. The Court held the 1945 law should be read to link international immunity to the law of foreign sovereign immunity allowing the two to develop in tandem and, accordingly, the 1976 law also applies to international organizations. Justice Stephen Bryer dissented and Justice Brett Kavanaugh did not participate in the case.
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