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What If the World Bank Financed Human Rights Violations: Jam v. International Finance Corporation

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11 Mar 2019
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March 11, 2019

Jam v. International Finance Corporation, 586 U.S. ___ (2019) (Roberts, C.J.).
Response by Ralph G. Steinhardt
Geo. Wash. L. Rev. On the Docket (Oct. Term 2018)
Slip Opinion | SCOTUSblog

What If the World Bank Financed Human Rights Violations: Jam v. International Finance Corporation

At first glance, the Supreme Court’s 7–1 decision in Jam v. International Finance Corporation is a simple illustration of established principles of statutory construction, especially the Court’s textualist imperative. The federal statute at issue in the case, the International Organizations Immunities Act (“IOIA”), provides that international organizations are entitled to the “same immunity from suit and every form of judicial process as is enjoyed by foreign governments.”1 The explicit link between an organization’s immunity and a foreign government’s immunity led the Court to turn to a later statute, the Foreign Sovereign Immunities Act (“FSIA”), under which foreign governments enjoy a presumption of immunity subject to certain exceptions. These include inter alia certain commercial activities with a nexus to the United States, certain torts in the United States, and waiver.2 In effect, Jam holds that international organizations are entitled to the same presumption of immunity and subject to the same suite of exceptions.

The Jam decision defines the applicable law for the lower courts to determine whether they have subject matter jurisdiction over a case against the International Finance Corporation (“IFC”), an affiliate of the World Bank located in Washington D.C., which has been accused of facilitating violations of environmental and human rights law in a development project in India. Additional pre-trial motions doubtless lie ahead on remand, and the complex issues litigated under the FSIA now potentially transfer to a variety of civil actions against a variety of intergovernmental institutions. If Congress weren’t broken at the moment, one might expect legislative clarification of whether this is what the domestic law should be, and the renegotiation of the international instruments establishing and governing U.S.-based intergovernmental organizations—including the scope of their privileges and immunities—cannot be ruled out.

Choice of Law Across Time

At a minimum, the Court was faced with an issue of intertemporal law. In 1945, when the IOIA was adopted, there was no statute governing foreign sovereign immunity, and the common law standard was one of “virtually absolute” immunity, subject to the recommendations of the Department of State. If the IOIA froze those post-war standards into current doctrine, then the IFC would be entitled to absolute immunity subject only to the President’s override—precisely what the Court of Appeals for the District of Columbia Circuit had decided in the proceedings below.3 In effect, a court in the twenty-first century would be obliged to determine the immunity of an international organization in precisely the same way as the Truman Administration would have.

Beginning with the famous Tate Letter of 1952 and culminating in the adoption of the FSIA in 1976, however, both the doctrine and the process governing the immunity of states changed fundamentally. The absolute theory was replaced by a restrictive theory, and decisions regarding the extension of immunity were vested in the judiciary, not the executive branch, applying more depoliticized principles of international law and the FSIA itself. In the absence of any relevant action by Congress to amend the IOIA, the Jam majority was persuaded by the text of § 288a(b) that the immunity of international organizations must be continuously updated by judicial interpretation to keep the scope of immunity equivalent between foreign sovereigns and international organizations.

The Jam court was considerably less explicit about the consequences of a parallel transformation at the international plane. Since 1949, when the International Court of Justice established that an intergovernmental organization is “capable of possessing international rights and duties,”4 hundreds of intergovernmental organizations have been created with expansive mandates. Their actions—whether breaching an employment contract5 or introducing cholera in areas of operation6 —have frequently been challenged in domestic and international fora, with varying results, often turning on the precise terms of their foundational instruments (or treaties7), the availability and adequacy of internal accountability mechanisms, and the prospect that civil litigation in domestic courts will interfere too much with their functionality or undermine their purposes. The Jam Court made no effort to recognize—let alone harmonize and apply—this extensive body of comparative and international authority.

Canons of Construction: “Looking Over a Crowd and Picking Out Your Friends”8

The impression that Jam simply confirms the Court’s domestic legisprudence is buttressed by the fact that its interpretation of the text is both reinforced by an orthodox canon of statutory construction and not displaced by arguments of legislative purpose. Under the so-called “reference canon,” if a statute “refers to a general subject, the statute adopts the law on that subject as it exists whenever a question under the statute arises,”9 not at the time the statute was enacted. Here, the IOIA’s reference to the immunity “enjoyed by foreign governments” is, according to the Court, “an instruction to look up the applicable rules of foreign sovereign immunity, wherever those rules may be found.”10 In contrast, if a statute refers to another statute by specific title, the referenced statute is adopted as it existed at the time the referring statute was adopted, and the law is frozen until Congress acts. But statutes in common law orbits like the IOIA presumably also reflect a contemporaneous Congress’s understanding of a legal standard and a direction to the courts to apply it subject to subsequent alteration by Congress. By apparently foreclosing updating only when one statute specifically refers to another statute by title, Jam becomes the latest authority for the controversial practice of “dynamic statutory interpretation” by the courts.11

On the other hand, the ghost of Justice Scalia made legislative purpose arguments especially suspect in Jam. Over Justice Breyer’s dissent on this issue, the Court had little trouble rejecting the argument that the purposes served by international organizations’ immunity are fundamentally different from those served by foreign sovereign immunity: “Whatever the ultimate purpose of international organization immunity may be . . .the immediate purpose of the immunity provision is expressed in language that Congress typically uses to make one thing continuously equivalent to another.”12

Consequences

Scholarly speculation about the reach of the IOIA has routinely addressed the consequences of holding international organizations accountable in domestic courts, with particular reference to the problem that litigation “floodgates” would open against a range of organizations, especially those headquartered in the United States. But the prospect of the dreaded floodgates—though it figured prominently in the oral argument13 and in Justice Breyer’s dissent—is to some extent overblown, because the most prominent intergovernmental organizations headquartered in the United States, including the United Nations and the Organization of American States, explicitly preserved an absolute immunity in their founding documents, subject only to case-by-case waiver, and nothing in the IOIA or the FSIA obliges U.S. courts to override those provisions under the later-in-time rule. Future cases against international organizations should begin with the terms of their foundational instruments.14 The floodgates may be especially difficult to open against international organizations even if subject matter jurisdiction were proper, given Iqbal-Twombly pleading requirements, the forum non conveniens doctrine (and its relationship to an organization’s internal accountability mechanisms), the political question doctrine, and the cryptic territorial nexus requirements (sometimes expressed as “touch and concern” or “focus” tests) on which the Supreme Court has lately relied in subject matter jurisdiction cases.15

Still it is doubtless true that the multiple complexities of FSIA litigation, including the characterization of activities as immune-because-governmental or litigable-because-commercial, may now be transplanted into litigation against international organizations. Under the FSIA, whether an activity is commercial is determined by its nature, not its purpose,16 meaning that if a private actor can or typically does engage in the activity, it is likely to be deemed commercial and not immune (jure gestionis). If it can only be carried on by governments, it is likely to be deemed non-commercial and immune (jure imperii). But characterization is an adversarial battleground and will certainly be litigated on remand in Jam, because the IFC provides loans to private businesses for projects in developing countries that would not otherwise attract private capital. Framed merely as a project finance, the IFC’s actions are by nature commercial, and the test will be whether its decisions in Washington, D.C. satisfy the nexus requirements of the exception. Framed instead as project finance that no private actor engages in, plaintiffs will have to rely on some other exception to overcome the presumption of immunity.

Jam may be understood as a continuation of the effort to hold intergovernmental organizations accountable for violations of international law, without relying on their internal watchdogs. The idea that human rights violations can take commercial form has been central to the generational effort to hold multinational corporations liable when they adopt a business plan that relies on human rights violations for profit, but the World Bank Group and the International Monetary Fund have been tougher nuts to crack. For decades, they have considered themselves constrained by the legal obligation to make their decisions apolitically and without reference to ideology, with the result that human rights concerns were traditionally considered out of bounds. Indeed, Philip Alston, the United Nations Special Rapporteur on Extreme Poverty and Human Rights, recently declared that “that the existing approach taken by the Bank to human rights is incoherent, counterproductive and unsustainable. For most purposes, the World Bank is a human rights-free zone. In its operational policies, in particular, it treats human rights more like an infectious disease than universal values and obligations.”17 Jam and its progeny may in limited circumstances trigger a new and much-needed approach.

Ralph G. Steinhardt is the Lobingier Professor of Comparative Law and Jurisprudence at the George Washington University Law School.

  1. 22 U.S.C. § 288a(b) (2012).
  2. 28 U.S.C. § 1605(a)(1)–(6) (2012).
  3. Jam v. IFC, 860 F.3d 703 (D.C. Cir. 2017), rev’d, No. 17-1011 (U.S. Feb. 27, 2019). The Supreme Court rejected the analysis of the D.C. Circuit in Atkinson v. Inter-American Development Bank, 156 F.3d 1335 (D.C. Cir. 1998), on which the Jam panel had relied extensively, and thereby resolved a conflict among the circuits. See OSS Nokalva v. European Space Agency, 617 F.3d 756 (3d Cir. 2010).
  4. Reparation for Injuries Suffered in the Service of the United Nations, Advisory Opinion, 1949 I.C.J. Rep. 174, 179 (Apr. 11).
  5. See, e.g., Waite and Kennedy v. Germany, 1999-I Eur. Ct. H.R. at para. 50 (1999).
  6. See, e.g., Georges v. United Nations, 834 F.3d 88 (2d Cir. 2016).
  7. See, e.g., Convention on the Privileges and Immunities of the United Nations, Feb. 13, 1946, 21 U.S.T. 1418.
  8. See Patricia M. Wald, Some Observations on the Use of Legislative History in the 1981 Supreme Court Term, 68 Iowa L. Rev. 195, 214 (1983).
  9. Jam v. IFC, No. 17-1011, slip op. at 9 (U.S. Feb. 27, 2019) (emphasis added) (citing 2 J. Sutherland, Statutory Construction §§ 5207–5208 (3d ed. 1943).
  10. Id. at 11.
  11. See generally William N. Eskridge, Jr., Dynamic Statutory Interpretation (1994).
  12. Jam, slip op. at 9.
  13. Transcript of Oral Argument at 26–27, 31, 66, Jam (No. 17-1011).
  14. In Jam, the Court noted in passing Article VII(3) of the IFC’s Articles of Agreement, which according to the court of appeals “read literally, would seem to include a categorical waiver,” Jam v. IFC, 860 F.3d 703, 706 (D.C. Cir. 2017), rev’d, No. 17-1011 (U.S. Feb. 27, 2019).
  15. See Kiobel v. Royal Dutch Petroleum Co., 569 U.S. 108 (2013); Morrison v. Nat’l Austl. Bank Ltd., 561 U.S. 247 (2010).
  16. 28 U.S.C. § 1603(d) (2012).
  17. Philip Alston (Special Rapporteur on Extreme Poverty and Human Rights), Rep. of the Special Rapporteur on Extreme Poverty and Human Rights, at 2, U.N. Doc. A/70/274 (Aug. 4, 2015), http://www.un.org/en/ga/search/view_doc.asp?symbol=A/70/274.

Recommended Citation
Ralph G. Steinhardt, Response, What If the World Bank Financed Human Rights Violations: Jam v. International Finance Corporation, Geo. Wash. L. Rev. On the Docket (Mar. 11, 2019), https://www.gwlr.org/jam-v-international-finance/.

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