By Rekha Oleschak-Pillai

In 2007 I participated in a conference on the Accountability of International Organisations, which resulted in a book titled ACCOUNTABILITY FOR HUMAN RIGHTS VIOLATIONS BY INTERNATIONAL ORGANISATIONS (https://intersentia.com/en/accountability-for-human-rights-violations-by-international-organisations.html). The main theme of the conference and the book was to examine what accountability of international organisations entails and what the implications of holding international organisations accountable for human rights would be. My contribution to the book looked at the World Bank, specifically the Inspection Panel of the World Bank (specifically International Bank for Reconstruction and Development), a mechanism that was brought into being through events that were the result of the protests against the Narmada Dam Project in India in the 1990s. I argued that while the idea of an internal accountability mechanism provides legitimacy to activities of the organisation, it remains more or less a very weak system. This is evidenced by the large number of projects that are challenged at the level of the Inspection Panel, of which almost none ever get stopped, even where the Inspection Panel finds ample indicators of non-compliance with the Banks own internal standards. A similar mechanism (Ombudsman) has been established for the International Finance Corporation (IFC), another arm of the World Bank, this one provides loans not to governments but to private actors. The mechanism more or less is as weak as the Inspection Panel.

On 27 February 2019, the United States Supreme Court issued a ruling in what might turn out to be a very historic case, BUDHA ISMAIL JAM ET AL. v. INTERNATIONAL FINANCE CORPORATION (No. 17–1011, 586 U. S. ____ (2019)). The crux of the matter to be decided here was the extent to which international organisations enjoy immunity. The petitioners are local fishermen, farmers and a village, negatively affected by the construction of a power plant (coal plant, owned by a subsidiary of the Tata Group) in Gujarat, India, financed by loans from the International Finance Corporation. The allegations are that the power plant has polluted the air, land, and water in the surrounding area. They filed a suit against the IFC in a Federal District Court (IFC has its headquarters in Washington D.C.), which rejected the suit on the ground that the IFC enjoys absolute immunity from suit, the Circuit Court affirmed this (with one Judge differing) and the SC granted Certiorari.

The question before Supreme Court is whether international organisations enjoy absolute immunity from suit or is this a more restricted immunity? The United States in earlier times (around Second World War) accorded foreign governments absolute immunity from suit (for all actions). This changed over time and became a more restricted form of immunity, namely, one which no longer applied for example, to “commercial activity”.

The law at hand is the US legislation, International Organizations Immunities Act (IOIA) enacted in 1945, in the aftermath of the Second World War and the heyday of the creation of several international organisations, including the United Nations, the International Monetary Fund, the World Bank etc. The Court compared the IOIA to the parallel legislation, the Foreign Sovereign Immunities Act (FSIA), enacted in 1952. The provision granting immunity in the IOIA uses the language, “same immunity from suit… as is enjoyed by foreign governments”, the question therefore was whether the immunity of international organisations is the same as the one which foreign governments enjoyed in 1945, namely absolute immunity or whether it refers to a more “evolved” restricted form of immunity which foreign governments enjoy now.

Both the majority opinion and the Dissenting Opinion of Judge Breyer make very interesting reading material for all interested in comparative and international law questions. Just to note down, J Cavanaugh was not involved.

The majority ruling takes a literal interpretation and comes to the conclusion that the reference to immunity of foreign governments is not one frozen in time but one which has evolved over time and this means that the two legislations, IOIA and FSIA have to be read as “continuously equivalent”. Since immunity of foreign governments is no longer the absolute immunity that they enjoyed earlier, the same would apply to international organisations. They do point out that international organisations can however by Charter bring in a clause of absolute immunity. The reject the claims of the IFC that the purpose of immunity of international organisations is not the same as that of foreign governments, especially in relation to commercial activity, specifically, more or less of all activities of international development banks would be subject to suit under the commercial activity exception, which would then apply like a rule. The majority held that international organisations do not enjoy “absolute immunity”, but a more “restricted immunity”.

What does this mean for the case at hand and for the future of holding international organisations accountable? First, for the petitioners, this means that a door has been opened, the case will be heard in Court and the IFC might still be able to wriggle out claiming that their actions are not “commercial activity” which would be difficult to argue, since the IFCs main role is lending to private actors, not sovereign governments. The case goes on and it remains to be seen if and how the IFC might be held responsible.

For the broader issue of accountability of international organisations, this ruling will prove historic. If the understanding of the immunity of sovereign governments has undergone a wide shift, this is not yet true of international organisations. The tremendous proliferation of international organisations, their vast areas of activities and their influence on human lives and environment has increased considerably. This has led to situations where no one can be held accountable for basic human rights violations and environmental degradation. In my opinion, there is still a long way to go, but the step taken is in the right direction.

For more information on the human and environmental effects, visit https://www.icij.org/investigations/world-bank/world-bank-groups-uncounted/