JAM v. INTERNATIONAL FINANCE CORP., ___ U.S. ___, No. 17-1011 (27 February 2019)

The International Finance Corporation (IFC) is an international organization headquartered in the United States.  The IFC finances private-sector development projects in poor and developing countries.  The IFC financed the construction of a power plant in India.  Local farmers and fishermen complained that the power plant polluted the air, land and water in the surrounding area, and they sued the IFC in U.S. district court.  In response, the IFC asserted absolute immunity from suit.

The International Organizations Immunities Act of 1945 (IOIA) grants international organizations, such as the IFC, “the same immunity from suit . . . as is enjoyed by foreign governments.” 22 U.S.C. §288a(b).  At the time the IOIA was enacted, foreign governments enjoyed virtually absolute immunity from suit.  Today, that immunity is more limited.  Most significantly, foreign governments are no longer immune from lawsuits based on certain kinds of commercial activity in which they engage.  In 1976, Congress passed the Foreign Sovereign Immunities Act providing that a foreign government may be subject to suit in connection with its commercial activity that has a sufficient nexus with the United States.  28 U.S.C. §1605(a)(2).

The question before the courts was whether the IOIA grants international organizations the virtually absolute immunity foreign governments enjoyed when the IOIA was enacted, or the more limited immunity they enjoy today.  The District Court concluded that the IFC is immune from suit because the IOIA grants the same degree of immunity that international organizations had in 1945 when the statute was enacted.  The D.C. Circuit affirmed.  The Supreme Court reversed.

The Supreme Court said that because the language of the IOIA naturally lends itself to granting international organizations the “same immunity” from suit “as is enjoyed by foreign governments,” the Act continuously links the immunity of international organizations to that of foreign governments, so as to ensure ongoing parity between the two.  Otherwise, the statute would have stated that international organizations “shall enjoy absolute immunity from suit,” or specified some other fixed level of immunity.  It would have defined immunity in a static way.

The Court further said that a natural reading of the IOIA is confirmed by a canon of statutory interpretation known as the “reference” canon, that was well established when the IOIA was drafted.  According to the “reference” canon, when 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.  For example, a statute allowing a company to “collect the same tolls and enjoy the same privileges” as other companies incorporates the law governing tolls and privileges as it exists at any given moment.  In contrast, a statute that refers to another statute by specific title or section in effect cuts and pastes the referenced statute as it existed when the referring statute was enacted, without any subsequent amendments.

The Court said that federal courts have relied on the reference canon to harmonize a statute with an external body of law that the statute refers to generally, and the same logic applies here.  The reference to immunity enjoyed by foreign governments is a general rather than specific reference.  The reference is to an external body of potentially evolving law – the law of sovereign immunity – not to a specific provision of another statute.

This was a seven-to-one decision.  Chief Justice Roberts wrote the majority opinion.  Justice Breyer dissented, arguing that using a “purpose-based” method of interpreting the Act would have produced a more sound result.  Justice Kavanaugh took no part in the consideration or decision.

John Polk is a Special Counsel at Berenzweig Leonard, LLP. John can be reached at [email protected].