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Jam v. International Finance Corp.

United States Court of Appeals, District of Columbia Circuit

June 23, 2017

Budha Ismail Jam, et al., Appellants
v.
International Finance Corporation, Appellee

          Argued February 6, 2017

         Appeal from the United States District Court for the District of Columbia (No. 1:15-cv-00612)

          Richard L. Herz argued the cause for appellants. With him on the briefs were Marco B. Simons and Michelle C. Harrison.

          Deepak Gupta was on the brief for amicus curiae Daniel Bradlow in support of appellants.

          Jennifer Green was on the brief for amicus curiae Dr. Erica Gould in support of appellants.

          Francis A. Vasquez, Jr. argued the cause for appellee. With him on the brief was Maxwell J. Hyman.

          Jeffrey T. Green and Sena N. Munasifi were on the brief for amicus curiae The International Bank for Reconstruction and Development, et al. in support of appellee.

          Before: Pillard, Circuit Judge, and Edwards and Silberman, Senior Circuit Judges.

          OPINION

          Silberman, Senior Circuit Judge

         Appellants, a group of Indian nationals, challenge a district court decision dismissing their complaint against the International Finance Corporation (IFC) on grounds that the IFC is immune from their suit. The IFC provided loans needed for construction of the Tata Mundra Power Plant in Gujarat, India. Appellants who live near the plant alleged-which the IFC does not deny-that contrary to provisions of the loan agreement, the plant caused damage to the surrounding communities. They wish to hold the IFC financially responsible for their injuries, but we agree with the well-reasoned district court opinion that the IFC is immune to this suit under the International Organizations Immunities Act, and did not waive immunity for this suit in its Articles of Agreement.

         I.

         Appellants are fishermen, farmers, a local government entity, and a trade union of fishworkers. They assert that their way of life has been devastated by the power plant.[1]

         The IFC, headquartered in Washington, is an international organization founded in 1956 with over 180 member countries. It provides loans in the developing world to projects that cannot command private capital. IFC Articles, art. III §3(i), Dec. 5, 1955, 7 U.S.T. 2197, 264 U.N.T.S. 117. The IFC loaned $450 million to Coastal Gujarat Power Limited, a subsidiary of Tata Power, an Indian company, for construction and operation of the Tata Mundra Plant. The loan agreement, in accordance with IFC's policy to prevent social and environmental damage, included an Environmental and Social Action Plan designed to protect the surrounding communities. The loan's recipient was responsible for complying with the agreement, but the IFC retained supervisory authority and could revoke financial support for the project.

         Unfortunately, according to the IFC's own internal audit conducted by its ombudsman, the plant's construction and operation did not comply with the Plan. And the IFC was criticized by the ombudsman for inadequate supervision of the project. Yet the IFC did not take any steps to force the loan recipients into compliance with the Plan.

         The appellants' claims are almost entirely based on tort: negligence, negligent nuisance, and trespass. They do, however, raise a related claim as alleged third party contract beneficiaries of the social and environmental terms of the contract. According to appellants, the IFC is not immune to these claims, and, even if it was statutorily entitled to immunity, it has waived immunity.

         II.

         Appellants are swimming upriver; both of their arguments run counter to our long-held precedent concerning the scope of international organization immunity and charter-document immunity waivers.

         The IFC relies on the International Organizations Immunities Act (IOIA), which provides that international organizations "shall enjoy the same immunity from suit . . . as is enjoyed by foreign governments, except to the extent that such organizations may expressly waive their immunity for the purpose of any proceedings or by the terms of any contract." 22 U.S.C. § 288a(b). The President determines whether an organization is entitled to such immunity. 22 U.S.C. § 288. The IFC has been designated an international organization entitled to the "privileges, exemptions, and immunities" conferred by the statute. Exec. Order No. 10, 680, 21 Fed. Reg. 7, 647 (Oct. 5, 1956).

         In response to the IFC's claim of statutory entitlement under the IOIA, appellants rather boldly assert that Atkinson v. Inter-Am. Dev. Bank, 156 F.3d 1335 (D.C. Cir. 1998), our leading case on the immunity of international organizations under that statute, should not be followed. Atkinson held that foreign organizations receive the immunity that foreign governments enjoyed at the time the IOIA was passed, which was "virtually absolute immunity." Id. at 1340 (quoting Verlinden B.V. v. Central Bank of Nigeria, 461 U.S. 480, 486 (1983)). And that immunity is not diminished even if the immunity of foreign governments has been subsequently ...


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