International Finance Corporation Not Absolutely Immune From Suit Filed By Gujarat Farmers And Fishermen: US Supreme Court [Read Judgment]

International Finance Corporation had loaned $450 million to Coastal Gujarat Power Limited for the construction of a coal-fired power plant in the state of Gujarat. In 2015, a group of farmers and fishermen who live near the plant, as well as a local village, sued the IFC in the United States District Court for the District of Columbia. They alleged that the power plant has polluted the air, land, and water in the surrounding area.

The District Court held that the IFC was immune from suit because the International Organizations Immunities Act of 1945 grants international organizations the virtually absolute immunity that foreign governments enjoyed when the IOIA was enacted. The Court of Appeals for the District of Columbia Circuit affirmed this ruling.

Reversing these orders, the majority of the Supreme Court held that IOIA affords international organizations the same immunity from suit that foreign governments enjoy today under the Foreign Sovereign Immunities Act (FSIA).

Chief Justice Roberts, who authored the judgment said: "The IFC contends that the IOIA grants international organizations the "same immunity" from suit that foreign governments enjoyed in 1945. Petitioners argue that it instead grants international organizations the "same immunity" from suit that foreign governments enjoy today. We think petitioners have the better reading of the statute."

The court also addressed IFC's contention that interpreting the IOIA immunity provision to grant only restrictive immunity would defeat the purpose of granting immunity in the first place, by subjecting international organizations to suit under the commercial activity exception of the FSIA for most or all of their core activities. It said: "An international organization's charter can always specify a different level of immunity, and many do. Nor is it clear that the lending activity of all development banks qualifies as commercial activity within the meaning of the FSIA. But even if it does qualify as commercial, that does not mean the organization is automatically subject to suit, since other FSIA requirements must also be met."

Remanding the case, the court held: "The International Organizations Immunities Act grants international organizations the "same immunity" from suit "as is enjoyed by foreign governments" at any given time. Today, that means that the Foreign Sovereign Immunities Act governs the immunity of international organizations. The International Finance Corporation is therefore not absolutely immune from suit."

Justice Breyer, in his dissenting opinion, held that the statute grants international organizations that immunity—just as foreign governments possessed that immunity when Congress enacted the statute in 1945.

Read Judgment