Budha Jam v. International Finance Corp.
2017 U.S. App. LEXIS 11160
| D.C. Cir. | 2017Background
- Plaintiffs are Indian residents (fishermen, farmers, local entity, union) alleging environmental harms from the Tata Mundra coal power plant financed by an IFC loan, claiming negligence, nuisance, trespass, and third‑party beneficiary contract claims.
- IFC (an international organization headquartered in Washington) loaned $450 million to Coastal Gujarat Power; the loan included an Environmental and Social Action Plan and gave IFC supervisory authority to enforce compliance.
- IFC’s internal ombudsman found noncompliance and criticized IFC supervision; IFC did not compel remediation or revoke support.
- Plaintiffs sued in U.S. court seeking to hold IFC financially responsible; district court dismissed on grounds of IFC immunity under the International Organizations Immunities Act (IOIA) and no waiver.
- The D.C. Circuit panel affirmed: IOIA confers immunity equivalent to sovereign immunity as interpreted in Atkinson, and the IFC’s charter waiver does not cover these claims under the Mendaro test (no corresponding organizational benefit).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether IFC is immune under IOIA | IOIA immunity should track modern foreign sovereign immunity (FSIA) and not be fixed to 1945 levels | IOIA grants international organizations the same immunity foreign governments enjoyed in 1945; IFC is designated and entitled to IOIA immunity | IFC immune; Atkinson governs — IOIA immunity is equivalent to the (virtually absolute) sovereign immunity as of enactment |
| Whether Atkinson precedent should be revisited | Atkinson is wrong; courts should apply a dynamic incorporation so IOIA follows FSIA developments | Atkinson is binding precedent and remains controlling circuit law (Nyambal reaffirmed it) | Court declines to overrule Atkinson; plaintiffs’ challenge to it fails absent en banc or Supreme Court action |
| Whether IFC waived immunity in its Articles of Agreement | Charter’s waiver (Art. 6) should be read broadly to allow suits enforcing environmental/social terms — such suits benefit IFC mission and community support | Even if charter language facially waives immunity, Mendaro limits waiver to suits that yield a "corresponding benefit" necessary for organizational functions; these tort/third‑party claims do not qualify | Waiver does not apply under Mendaro; plaintiffs’ tort and contract‑beneficiary claims fail to show corresponding benefit and are barred |
| Whether allowing suit would produce unfair burden/open the floodgates | Plaintiffs: accountability promotes IFC goals and community support; narrow enforcement will not cripple IFC | IFC: permitting these suits would subject every project to U.S. litigation and chill internal review processes | Court accepts IFC’s concerns; recognizing waiver here would threaten policy discretion and internal compliance processes, so dismissal affirmed |
Key Cases Cited
- Atkinson v. Inter-Am. Dev. Bank, 156 F.3d 1335 (D.C. Cir. 1998) (IOIA immunity treated as equivalent to foreign sovereign immunity at time of enactment; limiting subsequent diminution)
- Mendaro v. World Bank, 717 F.2d 610 (D.C. Cir. 1983) (charter waivers read narrowly; waiver applies only where suit would confer a corresponding benefit to the organization)
- Nyambal v. Int’l Monetary Fund, 772 F.3d 277 (D.C. Cir. 2014) (reaffirming Atkinson as controlling circuit precedent)
- Verlinden B.V. v. Central Bank of Nigeria, 461 U.S. 480 (1983) (historic description of sovereign immunity and executive‑branch role)
- Republic of Austria v. Altmann, 541 U.S. 677 (2004) (discussion of historical practice deferring to political branches on immunity)
- Lutcher S.A. Celulose e Papel v. Inter-Am. Dev. Bank, 382 F.2d 454 (D.C. Cir. 1967) (earlier case finding charter waiver supported suits by commercial debtors)
- Osseiran v. Int’l Fin. Corp., 552 F.3d 836 (D.C. Cir. 2009) (applies Mendaro to allow certain commercial‑relational claims despite charter waiver language)
- Vila v. Inter-Am. Invest. Corp., 570 F.3d 274 (D.C. Cir. 2009) (permitting some quasi‑contract claims under Mendaro framework)
- OSS Nokalva, Inc. v. European Space Agency, 617 F.3d 756 (3d Cir. 2010) (declining to follow Atkinson and holding IOIA immunity follows FSIA commercial‑activity exception)