Jam v. International Finance Corporation

139 S. Ct. 759 (2019)

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Nature of the Case

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Facts

In the wake of World War II, the United States and many of its allies joined together to establish a host of new international organizations. They included the United Nations, the International Monetary Fund, and the World Bank. The International Organizations Immunities Act of 1945 (IOIA) grants international organizations such as the World Bank and the World Health Organization the “same immunity from suit . . . as is enjoyed by foreign governments.” Courts looked to the views of the Department of State in deciding whether a given foreign government should be granted immunity from a particular suit. If the Department submitted a recommendation on immunity, courts deferred to the recommendation. If the Department did not make a recommendation, courts decided for themselves whether to grant immunity, although they did so by reference to State Department policy. The classical theory of foreign sovereign immunity is that theory, foreign governments are entitled to “virtually absolute” immunity as a matter of international grace and comity. In 1952, the State Department announced that it would adopt the newer “restrictive” theory of foreign sovereign immunity. Under that theory, foreign governments are entitled to immunity only with respect to their sovereign acts, not with respect to commercial acts. In 1976, Congress passed the Foreign Sovereign Immunities Act (FSIA). The FSIA codified the restrictive theory of foreign sovereign immunity but transferred “primary responsibility for immunity determinations from the Executive to the Judicial Branch.” Foreign governments are presumptively immune from suit. §1604. But a foreign government may be subject to suit under one of several statutory exceptions. A foreign government may be subject to suit in connection with its commercial activity that has a sufficient nexus with the United States. §1605(a)(2). D is an international organization headquartered in the United States. D finances private-sector development projects in poor and developing countries around the world. D expects its loan recipients to adhere to a set of performance standards designed to “avoid, mitigate, and manage risks and impacts” associated with development projects. Those standards are usually more stringent than any established by local law. D includes the standards in its loan agreements and enforces them through an internal review process. D financed the construction of a coal-fired power plant in Gujarat, India. Gujarat was required to comply with an environmental and social action plan designed to protect areas around the plant from damage. D could revoke financial support for the project if Gujarat failed to abide by the terms of the agreement. Gujarat did not comply with the environmental and social action plan in constructing and operating the plant. The audit report criticized D for inadequately supervising the project. Ps are local farmers and fishermen and a small village. They allege that the power plant has polluted the air, land, and water in the surrounding area. Ps sued D in the United States District Court for the District of Columbia. They claimed that pollution from the plant destroyed or contaminated much of the surrounding air, land, and water. They sued D for negligence, nuisance, trespass, and breach of contract. D maintained that it was immune from suit under the IOIA and moved to dismiss for lack of subject matter jurisdiction. The Court held that D was immune from suit because the IOIA grants international organizations the virtually absolute immunity that foreign governments enjoyed when the IOIA was enacted. The D. C. Circuit affirmed. The Supreme Court granted certiorari.