- I. Introduction
- II. International Organizations’ Immunities in the United States
- III. A Rules-Based Approach to Immunity
- IV. Application of U.S. Rules to Extraterritorial Cases
- V. Preventative Measures
- VI. Conclusion
In April 2018, 134 Nigerian workers filed a complaint against the international organization that had just loaned their employer billions of dollars, including an additional $1 billion USD authorized that year. The workers alleged that in 2017, the organization, the International Finance Corporation (IFC), had allowed their employer to discriminate against them by paying higher wages to foreign workers, and to attack them with “live ammunition, chemical spray, tear gas, and horse-whips” when they struck for fairer working conditions. If those allegations prove true, the IFC would have violated its internal rules of operation as well as U.S. federal rules regulating project funding. Nevertheless, the Nigerian workers could not have sued the IFC in a U.S. court. Like the courts in many countries, that U.S court would have instead granted the IFC jurisdictional immunity from suit.
On February 27, 2019, in Jam v. International Finance Corp., the Supreme Court reversed over half a century of jurisprudence and restricted the immunities granted to international organizations under the International Organizations Immunities Act (IOIA). In doing so, the Court held that international organization immunity and foreign sovereign immunity should be “continuously equivalent.” Therefore, just as foreign sovereign immunity could be restricted under the Foreign Sovereign Immunities Act (FSIA), so should the immunity of international organizations under the IOIA.
Jam is a landmark decision. It introduces the possibility that U.S. courts may hold international organizations accountable to national rules. It also introduces a potential avenue for extraterritorial lawsuits, such as the Nigerian case above, to land in those courts. However, Jam left a number of unanswered questions concerning the scope and standards for future litigation against international organizations in the United States. Although its policy and legal implications have yet to manifest, Jam’s residual uncertainty has already raised concerns among international organization scholars.
Some scholars fear that the application of the FSIA to international organizations will interfere with the abilities of those organizations to carry out their necessary operations. Under a “functional necessity approach,” these functionalist scholars argue that international organizations must remain autonomous to perform the multilateral duties that member states cannot carry out individually. National rules governing the immunities of international organizations should operate to facilitate, not impede, those duties. To functionalists, without sufficiently articulated limits, Jam threatens the core operations of international organizations.
Although they take a different approach to international organization immunity, constitutionalist scholars are equally concerned about Jam’s implications. Under the constitutionalist approach, international organizations are “constitutional creatures” whose powers are limited both by internal instruments, such as their charters, as well as by external instruments, such as general international law and human rights norms. Mechanisms internal to the organizations are then responsible for the supervision of those norms, thus enabling coherence among international organizations and protections against national interference and fragmentation. To constitutionalists, Jam threatens that coherence.
Despite the different approaches of functionalists and constitutionalists, there are some areas of ideological convergence. For instance, scholars under both approaches are concerned that, absent clear legal thresholds, Jam may have a deleterious impact on the activities and autonomy of international organizations. They predict that Jam’s theory of restrictive immunity could lead to excessive litigation against international organizations. They further predict that unfettered U.S. judicial supervision could lead to a fragmented legal order under which international organizations would be held to different and potentially biased legal standards. Under both approaches, therefore, Jam’s theory of restrictive immunity rests ominously.
The above predictions were raised by various scholars and stakeholders in their respective amici curiae briefs to the Supreme Court in Jam. The Jam Court made no effort to address them, nor did it telegraph potential limitations on the scope or reach of its new theory of restrictive immunity. For example, under the FSIA, foreign sovereign immunity may be restricted for nine reasons, including for torts and civil actions. In adopting the FSIA’s commercial acts exception for international organization immunities, the Court did not discuss the potential applicability of FSIA’s remaining exceptions to immunity.
The Jam Court also failed to explain whether courts should apply the same commercial acts standard to international organizations as they would apply to foreign governments under FSIA jurisprudence. Leaving that ultimate decision to the district court on remand, the Supreme Court nevertheless suggested through dicta that the FSIA’s standard should control. On remand, the district court agreed. Applying the high threshold of the FSIA’s commercial acts exception to the facts in Jam, the court ultimately ruled in favor of the IFC.
Inevitably, the FSIA’s commercial acts exception in the international organization framework will further confuse the immunities discourse. Courts created it to preserve the autonomy of foreign governments and their public functions. But international organizations are not foreign governments. Some have commercial mandates and will never operate in the public sphere. Application of the commercial acts exception to those organizations may—as it has in Jam—lead courts to afford unwarranted levels of deference.
The scope and reach of Jam’s theory of restrictive immunity are consequently open for debate. Nevertheless, neither functionalist nor constitutionalist theory is particularly helpful in informing that debate. Although both theories provide helpful conceptual platforms upon which immunities and international law may be debated in the abstract, they fail to examine the practical impact of cases such as Jam. For example, they rest their predictions of excessive litigation and interference on broad assumptions of conduct. Potential plaintiffs will bring their claims in droves to U.S. courts. Those courts will seek to interfere with international organizations’ duties by accepting those cases and weighing in on their merits. And so on.
This Article sets aside those theories and assumptions and instead adopts a more practical, rules-based approach. It examines the implications of Jam’s new and uncertain standard of immunity against the backdrop of an otherwise certain legal regime. To do so, it considers the relevant rules of both the international organizations and the United States. The rules of international organizations will include their constituent instruments, operational policies, and complaints mechanisms. National rules will include U.S. federal rules governing jurisdiction, contracts, and civil procedure.
Considering those rules, together, this Article questions three things. First, whether the predictions of litigation and interference have merit. Second, whether a narrow category of rights-based, extraterritorial claims might make it into U.S. courts notwithstanding the residual rules and obstacles. Third, whether, holistically, Jam’s courthouse door aperture might incentivize international organizations to improve their internal mechanisms to prevent litigation.
Setting the legal stage, Part II of this Article describes the evolution of U.S. rules governing international organizations’ immunities, concluding with Jam. Part III then turns to the charter-based rules governing a specific category of international organization, the multilateral development banks (MDBs). It looks in particular at their mandates, member state participation, and operational policies. Rebutting the prediction that Jam will lead to national interference, it argues that member governments have always had the opportunity to interfere with and thus fragment the operations of some of those institutions.
Shifting gears, Part IV applies U.S. national rules to potential extraterritorial suits against MDBs in federal courts. To better illustrate that application, it uses the facts from the Nigerian workers’ complaint discussed above to form a hypothetical suit. Highlighting the residual obstacles that will continue to confront potential plaintiffs, it argues that the prediction of excessive litigation—at least under the commercial acts exception—rests on the faulty assumptions that plaintiffs will bring those cases and that U.S. courts will accept them. It also argues that successful IOIA cases must rest on theories of contract and not on extraterritorial tortious harm. Finally, Part V identifies Jam’s indirect yet potentially most significant contribution that is largely absent from the immunities discourse. It has catalyzed international organizations—including some that will remain absolutely immune from suit after Jam—to reexamine and take measures to strengthen their internal accountability measures, thus abating the need for these lawsuits in the first place.
II. International Organizations’ Immunities in the United States
The 1945 U.S. government held a very different position on multilateralism than the 2020 U.S. government holds. While present-day activities involve eschewing participation in multilateral fora and challenging the authority of international organizations, the government in 1945 was fully supportive of the budding, post-war United Nations (U.N.). As observed by the U.S. delegation during the U.N.'s founding:
The United Nations, being an organization of all of the member states, is clearly not subject to the jurisdiction or control of any one of them and the same will be true for the officials of the Organization. The problem will be particularly important in connection with the relationship between the United Nations and the country in which it has a seat . . . . The United States shares the interest of all Members in seeing that no state hampers the work of the Organization through the imposition of unnecessary local burdens.
To entice the U.N. into locating its headquarters in Washington, D.C. that year, Congress enacted the IOIA to afford “[i]nternational organizations . . . the same immunity from suit and every form of judicial process as is enjoyed by federal governments . . . .” At the time of the IOIA’s enactment in 1945, the United States afforded foreign governments absolute immunity from suit.
By the 1950s, foreign governments were engaging in commercial activities with the private sector, an expansion from their previous role of strictly governing public interest. In 1952, the United States responded by adopting a more restrictive theory of foreign sovereign immunity, which it later codified in the Foreign Sovereign Immunities Act (FSIA). Under this restrictive theory, the United States continues to grant absolute immunity for states engaging in sovereign acts (acta jure imperii), but restricts that immunity for private activities (acta jure gestionis).
Following enactment of the IOIA, international organizations, like foreign governments, also expanded in size and scope. By the mid-1990s, they had increased their project-level operations. Those operations directly impacted local individuals and populations. The U.N., for instance, had begun to significantly expand its peacekeeping activities and direct dealings with communities. Similarly, MDBs such as the World Bank Group (the World Bank) had begun to invest in specific development projects that directly impacted local populations. Those expanded activities were met by allegations of fundamental human, environmental, and labor rights infringements.
A. Evolution of U.S. Rules Governing Immunities
Governments and international organizations have both expanded their activities. Yet, unlike foreign government immunity, the absolute immunity granted to international organizations remained static. Lacking the statutory authority to restrict immunity under the IOIA as they could under the FSIA, courts have struggled to decide the immunity of the international organizations before them.
More specifically, U.S. courts have struggled to interpret the constituent waivers of many of those international organizations. Those waivers, which are contained in the charters of MDBs, such as the International Bank for Reconstruction and Development (IBRD), the IFC, and Inter-American Development Bank (IDB) state:
Actions may be brought against the Bank only in a court of competent jurisdiction in the territories of a member in which the Bank has an office, has appointed an agent for the purpose of accepting service or notice of process, or has issued or guaranteed securities.
To become a member of an international organization, the United States authorizes legislation that takes those constituent waivers into account. That authorizing legislation provides for original jurisdiction in United States district courts over any suit brought against that organization in accordance with immunities specified in its charter. Despite authorizing legislation, the scope of those waivers has been unclear.
Many international organizations are headquartered in Washington, D.C., and, consequently, the Court of Appeals for the District of Columbia Circuit (D.C. Circuit) has been the most influential court in interpreting that constituent waiver. Initially, that court interpreted it broadly. In 1967, for instance, the D.C. Circuit held in Lutcher S. A. Celulose e Papel v. Inter-American Development Bank, that the waiver “permit[s] the assertion of a claim against the Bank by one having a cause of action for which relief is available.” The court viewed the language “actions may be brought against the Bank” as dispositive of founding intent to waive immunity “in broad terms.”
In its landmark 1983 decision in Mendaro v. World Bank, however, the D.C. Circuit changed approaches. Adopting a more functionalist view, the court held that the drafters of the constituent waiver “could only have intended to waive the Bank’s immunity from suits by its debtors, creditors, bondholders, and those other potential plaintiffs to whom the Bank would have to subject itself to suit in order to achieve its chartered objectives.” The court reasoned that an organization would not relinquish its immunity, unless it would gain a “corresponding benefit which would further the organization’s goals.” A waiver of immunity for “debtors, creditors, and bondholders” benefitted the organization because otherwise those parties would be hesitant to do business with it.
In 1998, the D.C. Circuit reaffirmed Mendaro’s narrow interpretation of the constituent waiver in Atkinson v. Inter-American Development Bank. In Atkinson, the plaintiff asked the court to compel the IDB to comply with a garnishment order. As it did in Mendaro, the D.C. Circuit began by assuming arguendo that the IDB was “entitled to absolute immunity” under the IOIA. Applying Mendaro’s charter-based benefits test, the court then concluded that the “clear lack of benefit” of garnishment proceedings compelled its conclusion that the IDB had not waived its immunity.
Next, the Atkinson court rejected the plaintiff’s claim that the IOIA should adopt the same theory of restrictive immunity that was contained in the FSIA. The court acknowledged the canon of statutory interpretation regarding reference statutes (“reference canon”), under which “[a] statute which refers to a subject generally adopts the law on the subject as of the time the law is enacted. This . . . include[s] all the amendments and modifications of the law subsequent to the time the reference statute . . . was enacted.” Even though the IOIA referred to the “same” immunities as those that were later modified in the FSIA, the court found it unnecessary to apply the reference canon. It instead deferred to a provision in the IOIA that preserved for the President the exclusive right “to modify, condition, limit, and even revoke the otherwise absolute immunity of a designated organization.”
In Osseiran v. International Finance Corp., the 2009 D.C. Circuit broadened the list of potential plaintiffs from “debtors, creditors, bondholders” to include contracting parties in a promissory estoppels and confidentiality case. Observing that Mendaro left it for the courts “to decide whether an international organization’s invocation of immunity for certain actions would interfere with its mission,” the court reasoned that the IFC’s conduct during negotiations resulted in sales agreements, which was the core business of the organization. It held that waiver of immunity for “claims arising out of that category of activity might help attract prospective investors by reinforcing expectations of fair play.”
In addition to disagreeing on the meaning and significance of the constituent waiver, courts have also disagreed on whether the FSIA’s theory of restrictive immunity applies to immunity afforded under the IOIA. In OSS Nokalva, Inc. v. European Space Agency, in 2010, the Third Circuit Court of Appeals explicitly rejected Atkinson and held instead that Congress intended the IOIA to “adapt with the law of foreign sovereign immunity.” The court found “nothing in the statutory language or legislative history that suggests that the IOIA . . . precludes incorporation of any subsequent change to the immunity of foreign sovereigns.” It then applied the same theory of restrictive immunity to the defendant international organization as it would have under the FSIA.
B. Jam v. International Financial Corporation (IFC)
Recognizing the issues brought to light in OSS Nokalva, courts and scholars have long called for a universal interpretation of the IOIA. In February 2019, the Supreme Court answered that call. In Jam, the Court overruled Atkinson and held that international organizations are granted the same restrictive immunity under the IOIA as foreign states are granted under the FSIA. The facts are as follows.
“Appellants [were] fishermen, farmers, a local government entity, and a trade union of fishworkers,” who alleged that the IFC’s $450 million loan to Coastal Gujarat Power Limited for plant construction and operation “devastated” their way of life. Before bringing suit, appellants had sought relief through the Office of the Compliance Advisor/Ombudsman (CAO) that supervises IFC operations. The CAO’s internal audit confirmed that the plant’s construction and operations did not comply with the IFC’s Environmental and Social Action Plan, and it criticized the IFC’s inadequate supervision. The IFC did nothing in response to the CAO’s findings. Appellants then filed suit in the D.C. Circuit alleging “negligence, negligent nuisance, and trespass.” Dismissing the case, the D.C. Circuit relied on Atkinson’s holding that international organizations enjoy “virtually absolute immunity” from suit under the IOIA.
In its nearly unanimous reversal, the Supreme Court applied Atkinson’s reference canon to resolve the question of immunities. Taking a strictly textualist approach to its reasoning, it reversed Atkinson and held instead that the IOIA’s reference to the “‘same immunity’ from suit ‘as is enjoyed by foreign governments’” linked the IOIA to the FSIA. It concluded that the respective laws of immunity must therefore develop “in tandem with the other.” Consequently, the Court held, international organizations should be granted the same restrictive immunity that is currently granted to foreign governments and the commercial acts exception contained in the FSIA should be read into the IOIA. As mentioned earlier, the Court did not elaborate on whether the FSIA’s additional exceptions should also be read into the IOIA.
Responding to the IFC’s concerns, the majority provided assurances in dicta that interpreting the IOIA’s immunity provisions as “anything less than absolute immunity” would not open the floodgates to litigation. First, the Court characterized the IOIA’s immunities as “default rules” that would be based on the immunities stipulated by instrument. The Court did not express any interest in applying Mendaro’s charter-based benefits test. It instead took for granted that the IFC’s constituent waiver effectively waived its immunity. All the same, it assured that international organizations could “always specify a different level of immunity” should they wish to avoid suit in the future.
Next, the majority noted that it was “not clear that the lending activity of all development banks qualifies as commercial activity within the meaning of the FSIA.” The Court promised that some lending activities, such as making certain loans to governments, could fall outside of the definition of “commercial.” Finally, the majority observed that, even if the international organization’s lending activity were appropriately commercial, the activity might not “have a sufficient nexus to the United States” to satisfy the FSIA’s commercial acts exception.
On remand, the U.S. District Court for the District of Washington, D.C. (D.C. District Court) agreed with the Supreme Court’s dicta. First, the court applied the FSIA’s statutory criteria for the commercial acts exception, which requires the action to be “based upon . . . ‘a commercial activity carried on in the United States.’” It further adopted FSIA jurisprudence requiring plaintiffs to establish that the “gravamen”—or core of their lawsuit—was carried on in the United States. Recalling that the plaintiffs’ complaint was based on the allegation that the IFC’s failure to prevent harm in India constitutes negligence, the court held that the complaint failed to establish harm in the United States.
The district court also examined the plaintiffs’ secondary claim, which alleged that the “IFC’s failure to ensure that the design, construction, and operation of the plant comply with all of the loan agreement’s environmental and social sustainability standards . . . constitute[d] a breach of [the] IFC’s contractual obligations.” Again applying FSIA jurisprudence, the court noted that the plaintiffs had offered no argument or evidence to support their claim that the IFC’s authorization of the loan agreement in Washington, D.C., was a negligent act. It recalled that the gravamen of the plaintiffs’ complaint was not the loan approval in Washington, D.C., but rather the IFC’s subsequent failure to prevent and mitigate harms to those who lived near the plant in India. Simply because the plaintiffs would not have a claim but for the IFC’s funding in Washington, D.C., or some other activity along the “causal chain,” did not mean that the suit was based upon that activity.
Finally, by way of footnote, the court summarily dismissed the plaintiffs’ theory that, should the commercial acts exception not apply, the IFC waived its immunity. The court reasoned that the Supreme Court’s decision had not overturned Mendaro’s corresponding benefits test or progeny. Therefore, in accordance with that precedent, the court held that “claims that implicate internal operations of an international organization . . . threaten the policy discretion of that organization” and consequently do not further that organization’s goals.
III. A Rules-Based Approach to Immunity
Although the D.C. District Court eventually ruled in favor of upholding the IFC’s immunity in Jam on remand, the Supreme Court’s decision to restrict the immunities of international organizations more broadly continues to elicit disquiet among international organizations scholars. This Article now turns to the broader theories underpinning the jurisdictional immunities discourse and examines those theories against the backdrop of the internal rules of international organizations.
Theorists predict that Jam’s restrictive immunity will interfere with the internal mechanisms of international organizations or otherwise lead to a fragmented legal order. However, at least in the MDB context, those predictions neglect to consider the constituent instruments at issue. Those instruments deliberately design a system of operation that requires the support and votes of diverse member states. Many also waive the immunities of their respective organizations, thus enabling member states to exercise jurisdiction over operations should they so wish. In other words, by constituent design, MDBs have always operated under a system vulnerable to member state interference and consequential fragmentation. Jam does not change that vulnerability.
The following sections explain those constituent instruments and argue that member states have exercised far greater control over the operations of MDBs than the current immunities discourse acknowledges. They further describe the rules-based relationship between those organizations and the United States, specifically. They highlight that, as a top investor, the United States is able to exercise significant control over the operations of MDBs ex ante. Finally, they describe the IFC’s efforts to systematically respond to the U.S. policies in each of its projects.
A. Charter-Based Rules of Multilateral Development Banks (MDBs)
MDBs are a type of international organization and, as such, are included in the public, multilateral landscape. Nevertheless, pursuant to their constituent instruments, many carry out lending and investment activities in the private sector of their member states. Their activities often include financing specific, factory-level projects in less-developed countries.
To become members, states must invest in the bank’s capital stock. The voting power of each member state is then based on its number of shares in the bank. Through their executive director representatives, member states exercise their power by voting on project-level loans and other policy and strategic issues. They also back the creditworthiness of those banks by providing seed money and guarantees.
Some international financial institutions are protected by virtue of their constituent instruments from jurisdiction in national courts while others are not. The IMF’s Articles of Agreement, for instance, stipulate that the Fund will “enjoy immunity from every form of judicial process” unless that immunity is expressly waived under the terms of a contract. On the other hand, the constituent instruments of MDBs, such as the World Bank and IFC, have taken a different approach. Acknowledging that states are more likely to invest their resources if they have legal recourse in the event of nonpayment, those instruments contain the constituent waiver quoted in Part II.
Theorists have consequently sounded the alarm of juridical fragmentation. The national rule that previously ensured equal treatment of immunities across international organizations has been reversed, exposing distinctions that were—consciously or not—established when those organizations were founded. Thus, although the various U.N. offices, the World Bank, and the IFC are all headquartered in Washington, D.C., and although some of these organizations carry out projects that directly implicate the wellbeing of vulnerable populations, those organizations whose constituent instruments reserve full immunities will remain immune under the IOIA while others will now be subject to suit. In this regard, Jam’s impact across organizations will be disparate, despite the fact that the activities of those organizations and their susceptibility to cause harm may be no different.
Application of a rules-based approach permits us to examine and rationalize jurisdictional immunities by focusing on the applicable legal frameworks. There is a drawback to this approach, however. By restricting our analysis to what is (the rules contained in legal instruments) rather than what should be (advocating for a system of coherence and justice), we confine ourselves to rules. In the present case for instance, we must face the possibility that, because of their internal rules, some international organizations will remain immune from suit despite breaking the same national rules as other international organizations.
On the other hand, this approach also permits us to evaluate those implications against the backdrop of broader international law. The patchwork of constituent instruments and respective immunities that collectively make up the international organizations regime has always enabled disparate treatment in national courts. Jam has merely exposed this fragmentation within the United States legal system by reversing a court-crafted blanket of immunities. Ironically, while theorists predict national interference in the wake of Jam, it is the very removal of that national interference that now elicits their concerns.
Immunities aside, the internal rules that enable member states to buy shares of the MDBs and exercise relative voting power also has a palpable effect on those institutions. As demonstrated in the United States, member states may use their voting power to achieve national objectives. Pursuant to congressional mandate, the United States applies the same priorities and policies across all MDBs in which it is a member. Tensions may eventually arise if the United States exercises jurisdiction over some institutions for violating those rules while lacking jurisdiction over others. Again, while this disparate treatment would not be ideal, it is the necessary and unavoidable consequence of ensuring that national systems give due import to international rules.
The following sections explain in greater detail the congressionally mandated policies that the United States exercises through its voting power. Taking the IFC as an example, these sections describe how these policies aim to ensure that U.S. funds do not risk undermining the rights of project-affected populations. They further explain how the IFC has, in turn, systematically incorporated those policies into its operation procedures.
B. Member State Participation: The IFC and the United States
The IFC is the world’s largest MDB. It was established eleven years after the IOIA, in 1956, and is based in Washington, D.C. In addition to restricting its activities to operations with “private enterprises,” the IFC’s Articles of Agreement provide it with the mandate to “undertake its financing on terms and conditions which it considers appropriate.” The United States is its largest contributor. As such, the U.S. government exerts tremendous influence over that organization. Due to its substantial share of votes, for example, the United States enjoys veto power over structural decisions and no major actions can go into effect without its consent. In Washington, D.C., the U.S. executive director votes on the IFC’s general operations, loan and credit proposals, and policy positions.
By congressional mandate, the U.S. executive director must screen all MDB projects, including the IFC’s, for a number of national objectives. One of those objectives is to protect the internationally recognized worker rights of employees hired under the development projects. Prior to authorizing project funding, the U.S. executive director must secure commitments to protect those rights, which include “the right of association, the right to organize and bargain collectively, a prohibition on the use of any form of forced or compulsory labor, and certain minimum labor standards that take into account differences in development levels among nations.” The U.S. executive director must also “include the status of such rights as an integral part of the institution’s policy dialogue with each borrowing country.” Finally, the executive director must require MDBs “to establish formal procedures to screen projects and programs funded by the institution for any negative impact in a borrowing country on [those] rights.”
To carry out these requirements, the U.S. Treasury Department maintains internal guidelines explaining how to engage with MDBs on labor rights. Pursuant to these instructions, the executive director must report to the Secretary of the Treasury Department and consult with various U.S. government agencies concerning each project. Through this interagency process, the U.S. government confirms that the MDBs have accepted its affirmative requirements as quid pro quo to funding the development programs in question.
C. The IFC’s Operational Policies and Complaints Mechanism
Responding to global concerns, including those of the U.S. government, the IFC’s member governments adopted new operational policies to protect the rights of vulnerable populations during the course of its projects. The IFC incorporates those policies, described below, into its project contracts.
1. The IFC’s Sustainability Framework.
In 2006, as amended in 2012, the IFC’s members adopted a Policy on Environmental and Social Sustainability (Sustainability Policy) and Performance Standards, collectively referred to as the IFC’s Sustainability Framework. According to the IFC, this Framework “articulates IFC’s strategic commitment to sustainable development and is an integral part of our approach to risk management.” To be eligible for funding, a potential client must meet certain criteria, including “satisfying [the IFC’s] environmental and social standards as well as those of the host country.” The IFC must incorporate its Sustainability Policy and Performance Standards into its project contracts and maintain overall supervision.
Under section 2 of the IFC’s Sustainability Policy, entitled “IFC’s Commitments,” the IFC “undertakes due diligence of the level and quality of the risks and impacts identification process carried out by its clients against the requirements of the Performance Standards, informed by country, sector, and sponsor knowledge.” It adds:
If the client fails to comply with its environmental and social commitments as expressed in the legal agreements and associated documents, IFC will work with the client to bring it back into compliance, and if the client fails to reestablish compliance, IFC will exercise its rights and remedies, as appropriate.
Under Performance Standard 2, entitled “Labor and Working Conditions” (PS2), the client must protect against child labor, forced labor, and discrimination; guarantee freedom of association and collective bargaining (collectively, the fundamental labor rights); and satisfy additional standards on occupational safety and health. By its terms, PS2 “applies to workers directly engaged by the client (direct workers), workers engaged through third parties to perform work related to core business processes of the project for a substantial duration (contracted workers), as well as workers engaged by the client’s primary suppliers (supply chain workers).”
2. The IFC’s Complaints Mechanism.
Individuals who have been harmed by an IFC project may bring their complaints to the CAO, which is an independent accountability mechanism under the World Bank Group located in Washington, D.C. According to the CAO’s Operational Guidelines, the grounds on which a complaint may be filed are drafted broadly “to encourage individuals or group(s) of individuals with concerns about a project to seek redress.”
After receiving a complaint, the CAO will notify the IFC and other relevant stakeholders. It will then carry out an assessment of the IFC’s conduct. Following its assessment, the case will follow one of two paths. If the parties agree, the CAO directs the case to its dispute resolution unit. If they do not agree, or if the case is not resolved during dispute resolution, the CAO directs the case to its compliance unit. The CAO may not enforce any corrective action.
As discussed, some theorists argue that the supervision of international organizations should be reserved for mechanisms such as the CAO and not left to national courts. Examinations of the CAO’s effectiveness, however, cast serious doubts over that argument. Those examinations demonstrate that, as witnessed in the Nigerian case and in Jam, it is far too easy for the IFC and its clients to disregard the CAO’s nonbinding recommendations, thus diminishing its potential to supervise and ensure conformity with internal and external rules. For example, one study shows that a quarter of all labor-related complaints before the CAO have spent years awaiting some form of action and remedy. During that time, workers were left without redress and employers were left to continue carrying out their labor practices, potentially to the lingering detriment of those workers. Deference to mechanisms like the CAO may make sense in theory, but in practice, those mechanisms simply lack the authority—if not the will—to effectively protect rights.
IV. Application of U.S. Rules to Extraterritorial Cases
By statute, the United States has a national interest in the activities of international organizations whose projects benefit from its financial assistance. In the labor context, those obligations highlight congressional concerns that the operations of MDBs can harm project-affected workers. To protect their fundamental rights, Congress attempts to exercise ex ante national control over those operations. Congress has not, however, established a mechanism under which it may control those operations ex post.
Jam now enables judicial supervision throughout the duration of the operation, at least in the cases of the IFC, World Bank, and other organizations whose constituent instruments waive their immunities. Scholars predict that Jam’s courthouse aperture will lead to encumbering litigation against international organizations in the United States. That prediction, however, presupposes that U.S. courts will be attractive to an excessive number of foreign plaintiffs, perhaps including project-affected workers long aggrieved by a weak CAO. This assumption neglects to consider two practical elements. First, extraterritorial litigation is expensive. Discovery abroad will be challenging, and plaintiffs (or their representatives) will likely incur travel costs in addition to traditional court and legal fees. As noted earlier, these projects are carried out in less developed areas. Potential plaintiffs in those areas may not have the resources available to launch their litigation.
Second, this assumption neglects to consider that U.S. courts are rather allergic to extraterritorial cases. Before plaintiffs can present the merits of their case, they must satisfy steep U.S. rules concerning procedure and jurisdiction. The D.C. District Court’s treatment of the plaintiffs’ tort allegation against the IFC on Jam’s remand confirms, for instance, that U.S. courts will dismiss allegations that lack a direct nexus between alleged harm and the United States. These rules will ensure that U.S. courts will supervise cases, including extraterritorial cases, only if the alleged harm was carried out on U.S. soil.
To critically examine the application of extraterritorial litigation, the following sections walk through those U.S. rules and apply them to the facts of the Nigerian hypothetical. This examination reveals how U.S. rules will create challenging obstacles that may deter foreign plaintiffs from risking the costs of extraterritorial litigation or otherwise render those attempts unsuccessful. Nevertheless, it also illustrates a strategy under which a narrow category of extraterritorial litigation might proceed. The volume of those cases, for better or worse, will be a far cry from the excessive and cumbersome litigation currently predicted.
A. U.S. Contract Doctrines
Under the U.S. Federal Rules of Civil Procedure, plaintiffs bringing extraterritorial suits in court must establish that they have standing to litigate and that they suffered actionable harm. To avoid the fate of Jam’s plaintiffs, future extraterritorial plaintiffs must also demonstrate that their claim had a sufficient nexus to the United States and thus was not based on tortious harm that occurred abroad. In the Nigerian case, for instance, plaintiffs must argue that it was the IFC in Washington, D.C., and not their employer in Nigeria, that caused their harm. To do so, they must rest their claim entirely on a breach of contracts theory. That claim could resemble the following.
The IFC negotiated its project contract in Washington, D.C. To attract funding from the U.S. executive director and other investors there, it expressly committed to protect the fundamental labor rights of the project’s workers. Those rights, incorporated by reference to PS2, included protections against discrimination and the right to engage in collective activities such as strike action. The IFC also committed to exercise its remedies against their employer in the event of contract violation. The IFC then failed to honor those commitments. According to the allegations, the employer’s discrimination and violent obstruction of their right to strike took place in 2017. Rather than take protective action, the IFC reexamined the project—in Washington, D.C.—where it authorized an additional $1 billion USD in loans to expand the project. In doing so, the IFC enabled the continuation of the employer’s activities, in violation of its commitment to protect against labor rights abuses and to exercise any rights or remedies against their employer and, consequently, in violation of its contractual duties. The below sections describe how the Nigerian workers, as plaintiffs, would invoke U.S. contract rules to argue that case.
1. Third-Party Beneficiaries in the United States.
At the outset, a contract claim raised by extraterritorial plaintiffs should be possible but will certainly be challenging. MDBs contract with local firms in developing countries, not with the plaintiffs. In the Nigerian case, for instance, the IFC’s contract was with Indorama Eleme Fertilizer and Chemicals Ltd. Under the privity of contracts doctrine, any such third-party claim “defies the basic structure of traditional, bargain-based contract doctrine.” Consequently, plaintiffs such as the Nigerian workers must demonstrate that they fall within an exception to the “presumptive irrelevance of non-parties’ concerns.”
The Restatement (Second) of Contracts defines the third-party beneficiary rule as “[a] promise in a contract [that] creates a duty in the promisor to any intended beneficiary to perform the promise, and the intended beneficiary may enforce the duty.” To enjoy third-party beneficiary status, plaintiffs need not show that they were expressly “identified when a contract containing the promise is made.” Rather, they must show that they “fall within a class clearly intended to be benefitted” by the contract.
U.S. courts should agree that, under PS2, the Nigerian workers fall within a class of intended beneficiaries defined above. As discussed earlier, PS2 expressly identifies the category of workers covered under its contracts as “workers directly engaged by the client (direct workers),” among others. The Nigerian workers were direct employees of the employer and therefore fall within the class of workers that the IFC incorporates into its contracts.
This holding would be consistent with U.S. jurisprudence interpreting third-party rights in public-private contexts. For instance, Professor Waters shows how the application of the third-party beneficiary doctrine has been a vehicle for securing the benefits of public programs through private suits. Chronicling jurisprudence interpreting private contracts formed under section 6 of the Securities Exchange Act of 1934, Waters illustrates the manner in which courts have permitted third-party beneficiary claims based on “contract[s] that would not exist but for that statute.” He concludes, where the contract in question is “the creature of the statute[,] the third-party beneficiary rule can become an auxiliary device to establish both a private right of action and standing to sue.”
Courts have similarly found that workers were intended third-party beneficiaries of a contract referencing federal labor law protections. In Chen v. Street Beat Sportswear, Inc., workers brought a third-party beneficiary contract claim against a domestic clothing manufacturer. Under their contract, the defendant and the Department of Labor stipulated to a compliance program requiring the defendant to review, monitor, and report on its contractors’ compliance with the Fair Labor Standards Act. Although the contract was silent with respect to enforceability by third parties, the court interpreted the intent of the parties by examining the contract as a whole. Holding that the workers were intended third-party beneficiaries, the court relied on the facts that the labor program required evaluation and monitoring for the sole purpose of their protection, and that the contract required the defendant to evaluate and report violations and to compensate them within a specific period.
Consistent with the above, the Nigerian workers could argue that the IFC predicated its project contract on its Performance Standards, which contain the labor rights protections required by the U.S. executive director for funding purposes. Those Performance Standards codify binding rules governing protection and redress for labor rights. Like the third-party beneficiaries above, they should be afforded private rights of action and standing to sue under the contract.
2. The Right to Performance in the United States.
In addition to establishing standing to sue under third-party rights, plaintiffs must establish that they were granted a right to performance, the failure of which is actionable. In Wal-Mart Stores, for example, the company incorporated a code of conduct into its contracts with supplier factories. That code required all suppliers to comply with local labor laws and mandated Wal-Mart to audit factories for compliance. Plaintiff workers sued Wal-Mart, arguing that they were intended third-party beneficiaries under that contract and thus had standing to sue when Wal-Mart failed to enforce the code’s labor standards. The court disagreed. Instead, it held that Wal-Mart’s contractual reservation to audit facilities did not amount to a promise to workers that it would enforce its code of conduct. The contract assigned the duty of performance to the promisor (supplier), not the promisee (Wal-Mart). Put simply, plaintiffs sued the wrong party.
To distinguish their case from Wal-Mart Stores, the Nigerian workers should highlight the IFC’s contractual commitments, as stipulated under PS2 and its Sustainability Policy, to: (i) carry out “due diligence”; (ii) “work with the client to bring it back into compliance”; and (iii) “exercise its rights and remedies, as appropriate.” They should compare those commitments to the commitments in the Securities Exchange Act cases, which referenced the duty to “enforce so far as within its powers.” 
B. Post-Jam Commercial Acts Exception
The above sections illustrate that U.S. rules will limit extraterritorial litigation against international organizations. Only those cases that can demonstrate a nexus to the United States, such as through contracts negotiated and executed at headquarters in Washington, D.C., followed by continuous decision-making (such as contract extensions), might prevail. In addition to satisfying federal rules governing contracts and civil procedure, plaintiffs must also demonstrate that the international organization’s jurisdictional immunity under the IOIA should be restricted. As discussed earlier, the courts will likely follow the D.C. District Court’s analysis of Jam on remand and examine IOIA cases under FSIA jurisprudence.
Under FSIA jurisprudence, courts again require a specific nexus to the United States. To establish that nexus, U.S. courts require that the allegedly harmful conduct was “based upon” either commercial activity in the United States or acts performed in connection to that commercial activity. Unhelpfully, the FSIA lacks useful statutory definitions for the critical terms “based upon” or “commercial activity.” Nevertheless, as explained below, plaintiffs should still be able to satisfy that standard. Alternatively, they could argue that, under the Mendaro progeny, the court should hold that the IFC’s Articles of Agreement expressly waived its immunity.
1. “Based Upon” Activity Carried out in the United States.
As discussed above, under the FSIA, a claim is “based upon” commercial activity if it is an element that, if proven, would entitle workers to relief. Courts apply this criterion on a case-by-case basis, examining both the alleged conduct and the language of the complaint. In examining Jam on remand, the D.C. District Court began by identifying the gravamen of the complaint. It then evaluated whether the plaintiff’s breach of contract claims—secondary to their negligence claim—were sufficiently linked to that gravamen. While plaintiffs could demonstrate that the IFC negotiated and designed its contract and loan approval in the United States, there was no evidence or theory to support how those actions were related to the tortious harm that took place in India. Plaintiffs also failed to provide evidence that the IFC’s board of directors acted negligently when it approved the loan in Washington, D.C. Because the plaintiff’s claim was based on negligence, and because the plaintiffs failed to provide any evidence that the conduct carried out in the United States was negligent, the court rightly dismissed their claim.
If future plaintiffs characterize their claims under torts theory, they will undoubtedly suffer the same fate as Jam’s plaintiffs. U.S. courts will summarily dismiss their arguments as “artful pleading” and will invoke jurisdictional rules to uphold the immunity of the international organization defendants. Instead, if the claim has any hope of satisfying this criterion, plaintiffs must characterize their complaint as one of breach of contract and not of torts.
In the Nigerian case, plaintiffs would have to rely on the same contracts theory to establish this criterion that they argued to establish standing and right to performance. To succeed, they must establish that the gravamen of their complaint rests on the IFC’s breach of contract in the United States. They would accordingly need to establish that the IFC undertook actions in the United States beyond the mere contractual negotiations. Given that the IFC holds the evidence of its subsequent transactions, including discussions with the executive directors and others within the framework of approving additional funds disbursements, satisfying this evidentiary criteria will be difficult. However, objective evidence that establishes further distributions of funds and deliberate approval to continue the project following a CAO finding of rights violations may be sufficient.
In our hypothetical, plaintiffs would point to the IFC’s approval of subsequent project funding in 2018, one year after their employer violated their labor rights and thus the contractual promise of labor rights protection. Although the IFC may counter that it was not made aware of those labor rights violations until the Nigerian workers filed their complaint in April 2018, plaintiffs would still have a strong argument that the IFC—at a minimum—breached its contractual commitment to supervise and enforce labor protections throughout the course of the project.
Given the lack of transparency surrounding executive director decision-making in Washington, D.C., in the absence of evidence concerning loan extensions and other public documents, most plaintiffs will struggle to find continuous activities carried out in the United States beyond preliminary contractual negotiations. Those in favor of near absolute jurisdictional immunities for international organizations should thus rest assured. On the other hand, the D.C. District Court may have just deprived those seeking accountability for international organizations’ harmful activities from the viable legal platform suggested in the Supreme Court’s ruling. Jam was a torts claim; its breach of contract allegation was both secondary and poorly crafted (it continued to rest on the negligent activity that took place in India). If subsequent courts disregard those nuances to implicate future breach of contract claims against international organizations, they will require that all elements of a breach of contract claim take place in the United States. In so doing, they will ensure that Jam’s theory of restrictive immunity remains inaccessible to foreign plaintiffs. By disregarding the significance of negotiating and contracting activities in the United States, IOIA jurisprudence would disregard the significance of basic contractual doctrines of consideration, promise, and performance. Finally, it would ignore the inherently transnational nature of international organizations’ commercial operations.
2. “Commercial” Activity.
In addition to establishing that their harm is sufficiently “based upon” acts carried out in the United States, plaintiffs must also demonstrate that those acts were “commercial.” Under the FSIA, most courts apply a “private person” test to distinguish commercial from sovereign activity. In Argentina v. Weltover, for instance, the Supreme Court distinguished between acta jure imperii and acta jure gestionis. The Court held that the bonds at issue were ordinary debt instruments that could have been issued by private actors. It unanimously held that Argentina’s bond obligations, which resembled private acts, constituted “commercial activity.”
Courts should agree that, like bonds, private actors could invest in development projects. Recall, however, the Supreme Court’s dicta in Jam, in which it predicted that “the lending activity of at least some development banks, such as those that make conditional loans to governments, may not qualify as ‘commercial’ under the FSIA.” The Court may have intended this prediction to assuage concerns that Jam would constitute a sea change in litigation. Yet, given that it delivered this prediction in a case against the IFC—an international organization that can only provide loans to private entities—the Court has unnecessarily invited confusion. The D.C. District Court provided no additional guidance; it dismissed the case on immunity grounds and therefore did not address whether the suit was based upon commercial conduct.
In a footnote to its statement of interest, the U.S. Department of Justice adds to this confusion. It argues that “even if IFC could have taken steps to mitigate the plaintiffs’ alleged injuries in India, IFC’s failure to take such action is not ‘a commercial activity carried on in the United States.’” This argument demonstrates the danger of applying FSIA jurisprudence to IOIA cases. A foreign government’s commercial contract in the United States is presumably distinct from its sovereign conduct carried out later in its home country. The commercial activities of some international organizations are different. Those activities originate in Washington, D.C., where the executive directors vote on a project contract intrinsically linked to the conduct of an operation subsequently carried out in a recipient country. The D.C. District Court did not reach this criterion because it dismissed the case for failure to satisfy the “based upon” criterion. However, if future U.S. courts apply the FSIA’s distinctions between commercial activity and sovereign conduct to these IOIA cases, they will mischaracterize both the transnational and commercial natures of international organizations’ operations. As with the “based upon” criterion, this outcome would diminish—if not abolish—the theory of restrictive immunity that Jam has just adopted. Its possibility also further illustrates the practical obstacles to litigation after Jam.
C. Post-Jam Constituent Waiver of Immunity
If plaintiffs cannot satisfy the commercial acts exception, they should argue that the international organization waived its immunity. The Jam Court explicitly reversed Atkinson but did not discuss Mendaro or its progeny. Although it is possible that Jam’s theory of restrictive immunity (applied to the IFC without discussion of Mendaro’s charter-based benefits test) will eclipse that jurisprudence, the D.C. District Court court disagreed with this possibility in Jam’s remand and held instead that Mendaro remained the applicable standard.
Given that the Supreme Court’s reasoning took for granted that the IFC’s immunity was waived under its Articles of Agreement, other district courts may eventually disagree with the D.C. District Court. Nevertheless, even assuming arguendo that Mendaro’s test remains relevant, plaintiffs might have a persuasive argument under a different theory than that presented in Jam. As discussed earlier, under Mendaro’s test, plaintiffs must establish that subjecting an international organization to suit would facilitate the discharge of its functions. Under that jurisprudence, however, plaintiffs are restricted to a narrow class of debtors and the like. Possible plaintiffs would almost certainly exclude project-affected populations such as foreign workers.
In cases like the Nigerian hypothetical, therefore, plaintiffs must focus on the IFC’s commitment to protect their rights to secure critical U.S. funding. Unless the U.S. executive director continues to believe that the IFC will honor that commitment, it is statutorily required to oppose funding. The United States is a leading funder of IFC projects; therefore, its withdrawal of financial support would impede the IFC’s ability “to achieve its chartered objectives.”
Professor Singer disagrees with this theory. Drawing parallels with sovereign borrowers, he argues that international organizations, like states, “must return repeatedly to the international bond markets.” Consequently, if they default on their debt, those organizations will have to pay a higher price in the future. It is thus “generally counterproductive to be identified as a cheat.” Therefore, Singer argues, there is no relationship between the restricted immunities of those institutions and their ability to fulfil their purposes. On this element, we disagree.
As discussed above, the international organizations’ reputation as responsible debtors is not at issue. Instead, it is their reputation as credible bargainers and profitable investors. If MDBs were granted immunity from suit for their development projects despite their contractual commitments to donors, they would likely face reluctant financiers. Aside from the United States, other contributing governments could refuse to fund IFC projects, further impeding the IFC’s ability to operate. At least in a labor rights context, the IFC’s failure to honor its labor commitments will be bad for business. Discontented workers strike to improve their working conditions. These strikes may stall production and result in lost profits.
V. Preventative Measures
Extraterritorial litigation against international organizations after Jam will be complicated. Thus far, the literature examining Jam has focused on the implications of litigation but has largely ignored potential secondary effects, such as the impact restrictive immunity will have on the behavior of international organizations. This Article now turns to that issue.
If constitutional instruments expose international organizations to litigation in the United States after Jam, it seems that those organizations could simply amend those instruments to grant themselves broader immunity or move from the United States to a country with stronger immunities protections. However, this prediction would erroneously assume that international organizations take these kinds of measures as singular entities. International organizations may take measures only if their member states so vote. In this case, the U.S. government—as a member—would have to vote to support the granting of absolute immunities, or the movement of the institution, despite its interest in ensuring accountability during the course of commercial operations. This seems unlikely to happen.
Perhaps reflecting their member states’ deliberations, some international organizations have already reacted to Jam by taking steps to strengthen their internal rules and accountability. Again, the IMF’s constituent instruments preserve its broad immunity from suit. Nevertheless, shortly after Jam, in April 2019, the Joint Ministerial Committee of the Boards of Governors of the Bank and the Fund established to review their respective accountability mechanisms. That Committee pledged to “be innovative and work together in mobilizing private sector solutions and resources, leveraging sectoral reforms, and mitigating investment risks.” 
Also in April, IFC CEO Philippe Le Houréou acknowledged that the IFC’s board of directors had similarly “decided to review our environmental and social accountability framework, including the role and effectiveness of [the] CAO.” Conceding that his institution “can do better,” Le Houréou proposed that “[g]oing forward, when we become aware of complaints or concerns, we will look into them more systematically.” He pledged to “engage immediately to see what we can do to resolve [compliance issues]” and, if future clients do not comply with the IFC’s Performance Standards, “as a last resort, we will take the tough decision to enforce the terms of our agreements with them and withdraw or exit from the project.”
Given the uncertainty surrounding the likelihood of litigation against international organizations, especially for international organizations that continue to retain broad immunities, it remains uncertain whether the above public statements will translate into salient action. Now that Jam has been dismissed on remand, international organizations may begin to relax their preventative efforts.
One possible incentive for international organizations to continue to strengthen internal accountability is to respond to the negative attention that has been placed on their development projects in Jam’s wake. The executive directors of those organizations represent the interests of various member states that have presumably been following the unfolding of Jam’s immunities discourse. Those executive directors drive the policies of their respective organizations and thus may have called for change.
In addition to their internal politics, international organizations such as the World Bank and the IFC may also be taking precautionary action in recognition of the slim—albeit possible—likelihood of litigation. One oft-overlooked benefit of rules is that they deter harmful behavior. Now confronted by new national rules of jurisdiction, these organizations may have been catalyzed to prevent harm.
Jam was not a perfect decision by any means. Nevertheless, it has recast the immunities of international organizations in a new, vulnerable light. For different reasons, functionalists and constitutionalist theorists are concerned about the implications of unbridled litigation against international organizations in national courts. An examination of Jam’s implications through a rules-based lens, however, should mollify those concerns. That examination reveals that the Supreme Court actually took a significant step in the right direction. Its theory of restrictive immunity helps to ensure that commitments made to the United States ex ante may eventually be supervised ex post, and it incentivizes international organizations to prevent actionable harm in the first place. The residual legal requirements that plaintiffs must satisfy in order to bring those cases into U.S. courts provide the necessary checks and balances to protect against excessive litigation.
A rules-based examination reveals an additional yet no less critical development. Even with its residual requirements and imperfections, Jam’s courthouse aperture has introduced a (concededly) slim margin of opportunity. Some project-affected individuals harmed in the business of international development projects may now demand accountability. While potential litigants will continue to face significant legal hurdles, those hurdles are not as high nor as absolute a bar to litigation as was the immunity in place before Jam. In that respect, Jam’s global implications are even more significant than theorists predict.
Nigeria/Eleme Fertilizer-01/Port Harcourt, Compliance Advisor Ombudsman: CAO Cases, http://www.cao-ombudsman.org/cases/case_detail.aspx?id=1273 [https://perma.cc/A3WK-QVXA] (last visited July 25, 2020).
See Off. of the Compliance Advisor Ombudsman, CAO Assessment Report Regarding Concerns in Relation to IFC’s Investment in Eleme Fertilizer I and II (Projects #30967 and #40420) in Nigeria 6 (2019) [hereinafter CAO Assessment Report].
Id. at 7.
For a further description of the IFC’s commitments to the U.S. government, see infra Section III.B.
See generally August Reinisch, The Immunity of International Organizations and the Jurisdiction of Their Administrative Tribunals, 7 Chinese J. Int’l L. 285, 294 & n.45 (2008) (domestic courts around the world, including Italy, have provided international organizations absolute immunity from suit); Cedric Ryngaert, The Immunity of International Organizations Before Domestic Courts: Recent Trends, 7 Int’l Org. L. Rev. 121, 124–26 (2010) (discussing immunities practices in Italy, Belgium, Switzerland, and Denmark). This Article focuses exclusively on jurisdictional immunity of international organizations and omits the question of the status, privileges, and immunities of their functionaries and staff, which raises complex issues that are outside the scope of discussion. For an analysis of additional forms of immunity, see Edward Chukwuemeke Okeke, Jurisdictional Immunities of States and International Organizations 231 (2018).
Jam v. Int’l Fin. Corp., 139 S. Ct. 759, 759 (2019).
Id. at 764–66, 772.
Id. at 768. The commercial activities exception first appeared in the Foreign Sovereign Immunities Act (FSIA). See Foreign Sovereign Immunities Act, 28 U.S.C. §§ 1603, 1605(a)(2). For a discussion of that exception and its application to international organizations, see infra Section IV.B.
Jam, 139 S. Ct. at 772.
See, e.g., Clemens Treichl & August Reinisch, Domestic Jurisdiction over International Financial Institutions for Injuries to Project-Affected Individuals: The Case of Jam v International Finance Corporation, 16 Int’l Org. L. Rev. 105, 107 (2019) (arguing that Jam has “game-changing implications”); Nicholas Johnson, Jam v. IFC: One Step Forward, Two Steps Back?, 19 Sustainable Dev. L. & Pol’y, Spring 2019, at 16 (arguing that Jam leaves many legal questions unanswered); Daniel D. Bradlow, Multilateral Development Banks, Their Member States and Public Accountability: A Proposal, 11 Indian J. Int’l Econ. L. 21, 30 (2019) (noting the potential impact of Jam on international organizations). Compare David P. Stewart, Recent Books on International Law, 113 Am. J. Int’l L. 643, 648 (2019) (reviewing Okeke, supra note 5) (noting that Jam “promises to generate considerable litigation and (very likely) confusing results”), with Chimène I. Keitner & Scott Dodson, Jam v. International Finance Corp., 113 Am. J. Int’l L. 805, 809 (2019) (arguing that the “jurisprudential import of the Jam decision may be greater than its practical effect”).
See, e.g., Brief of International Law Experts as Amici Curiae in Support of Respondent at 4, Jam v. Int’l Finance Corp*.*, 139 S. Ct. 759 (2019) (No. 17-1011) [hereinafter Brief of International Law Experts] (a ruling in favor of restrictive immunity for international organizations “would not only change this long-standing reality, it would, if followed elsewhere, open the door to unwelcome state interference in the functioning of [international organizations]”). See generally Research Handbook on the Law of International Organizations 5–6 (Jan Klabbers & Åsa Wallendahl eds., 2011) [hereinafter Research Handbook] (describing the predominant legal theory behind the immunities of international organization—functionalism—and its belief that “international organizations can do such things as would be necessary for their effective functioning”).
See Research Handbook, supra note 11, at 5–6 (describing functionalist theory, which operates under the assumption that international organizations must be free from state interference to carry out their delegated powers).
Id. at 6.
See Brief of International Law Experts, supra note 11, at 17–18 (arguing that the FSIA’s commercial activity exception should not be applied against international organizations because it would obstruct their mission).
Jan Klabbers, Constitutionalism Lite, 1 Int’l Org. L. Rev. 31, 33 (2004) (describing the tenants of constitutionalism before setting out its shortcomings); see also José E. Alvarez, Frameworks for Understanding the ILO, in ILO100: Law for Social Justice 59, 69 (George Politakis et al. eds., 2019) (constitutionalist pay special deference to international organizations’ founding documents).
See Alvarez*, supra* note 15, at 70.
See, e.g., Treichl & Reinisch, supra note 10, at 130 (arguing that Jam should have been decided on international human rights grounds).
See Alvarez, supra note 15, at 69 & n.35.
See, e.g., Michael Singer, Jurisdictional Immunity of International Organizations: Human Rights and Functional Necessity Concerns, 36 Va. J. Int’l L. 53, 63–64 (1995) (“[A]pplying the restrictive [theory of immunity] to international organizations would have severe adverse consequences,” such as permitting “municipal courts to cut deep into the region of autonomous decision-making authority of institutions.”); Daniel D. Bradlow, Using a Shield as a Sword: Are International Organizations Abusing Their Immunity?, 31 Temple Int’l & Compar. L.J. 45, 67 (2017) (“It is not clear that a state, which is one subject of international law, has the power to sit in judgment over how another subject of international law, an [international organization], implements its customary international law obligation . . . .”); Keitner & Dodson, supra note 10, at 811 (expressing a functionalist concern regarding burdens of litigation for international organizations). As the sole dissenter, Justice Breyer cautioned that the majority’s interpretation of the IOIA to permit application of the commercial acts exception to international organizations would lead to, in the very least, “uncertaint[ies] for organizations involved in finance.” Jam v. Int’l Fin. Corp., 139 S. Ct. 759, 778 (2019) (Breyer, J., dissenting).
See, e.g., Keitner & Dodson, supra note 10, at 811 (expressing concern that international organizations will now be encumbered “by the burdens of litigation and the threat of excessive damages awards”); Brief of International Law Experts, supra note 11, at 36 (application of the FSIA exceptions to immunity to international organizations “would lead to a surge in domestic litigation against [international organizations] that . . . have only a tenuous connection to the United States”).
See Bradlow, supra note 19, at 67 (cautioning that individual state court supervision could lead to “states reaching mutually inconsistent decisions”). See generally Michael Singer, Abandoning Restrictive Sovereign Immunity: An Analysis in Terms of Jurisdiction to Prescribe, 26 Harv. Int’l L.J. 1, 3 (1985) (if municipal courts are left to draw distinctions between public and private acts, their results “cannot fail to be inconsistent”).
See, e.g., August Reinisch, To What Extent Can and Should National Courts ‘Fill the Accountability Gap’?, 10 Int’l Org. L. Rev. 572, 579 (2014) (piercing the veil of international organizations runs the risk of exposing those organizations to bias and unfair trials). Justice Breyer echoed this concern in his dissent, in which he pointed to alternative means of accountability that would implicate “multilateral, not single-nation, solutions.” Jam, 139 S. Ct. at 780 (Breyer, J., dissenting).
See, e.g., Brief of International Law Experts, supra note 11, at 4 (cautioning about the unintended consequences of adopting a theory of restrictive immunity for international organizations); Brief of Amici Curiae International Bank for Reconstruction and Development et al. in Support of Respondent at 15–16, Jam v. Int’l Finance Corp*., 139 S. Ct. 759 (2019) (No. 17-1011) [hereinafter Brief of IBRD] (a theory of restrictive immunity for international organizations would render multilateral development banks “attractive targets” for litigation and would entangle U.S. courts in “‘foreign-cubed’ litigation”). Compare Brief for Amici Curiae Member Countries and the Multilateral Investment Guarantee Agency in Support of Respondent at 18, Jam v. Int’l Finance Corp., 139 S. Ct. 759 (2019) (No. 17-1011) [hereinafter MIGA Brief] (“[P]recisely because such organizations consist of member countries, holding an international organization ‘liable’ for monetary damages poses distinct complications.”), with Brief of Amici Curiae Professors of International Organization and International Law in Support of Petitioners at 19–32, Jam v. Int’l Finance Corp.*, 139 S. Ct. 759 (2019) (No. 17-1011) [hereinafter Brief of Professors] (the Court’s application of the FSIA’s theory of restrictive immunity to international organizations would establish a “workable approach that complies with U.S. international obligations”).
See 28 U.S.C. § 1605(a)–(b). Those exceptions are: (1) waiver; (2) commercial activity; (3) expropriation; (4) property in the United States; (5) tort injury occurring in the United States; (6) arbitration; (7) torture, extrajudicial killing, sabotage or kidnapping; (8) enforcement of a maritime lien; and (9) foreclosure of a preferred mortgage. § 1605 (a)–(b), (d). For a discussion of the evolution of foreign sovereign immunities and the exceptions adopted under the FSIA, see M. Scott Bucci*, Breaking Through the Immunity Wall? Implications of the Terrorism Exception to the Foreign Sovereign Immunities Act*, 3 J. Int’l Legal Stud. 293, 301–11 (1997).
Jam, 139 S. Ct. at 772.
Jam v. Int’l Fin. Corp., 442 F. Supp. 3d 162, 179 (D.D.C. 2020) (applying the FSIA’s standard for applying the commercial acts exception to the allegations against the IFC on remand).
See Brief of International Law Experts, supra note 11, at 3 (“Incorporating the FSIA’s immunity provisions into the IOIA would also create grave interpretive problems.”); Brief of IBRD, supra note 23, at 20 (“The wholesale incorporation of the FSIA into the IOIA would raise a host of difficult questions regarding how to apply a statute specifically crafted for sovereigns to international organizations . . . .”).
See infra Section IV.B.2.
See Brief of International Law Experts supra note 11, at 3 (“International organizations and foreign states are fundamentally different creatures.”); Okeke, supra note 5, at 353 (“[A] major distinction between States and international organizations is that States possess all the rights and responsibilities under international law, whereas international organizations possess only those that are granted them by their constituent treaty.”).
See, e.g., Brief of IBRD, supra note 23, at 21 (arguing against application of the commercial acts exception to international financial institutions because, unlike foreign governments, those institutions cannot undertake sovereign acts).
See, e.g., Zhan v. World Bank, No. 19-cv-1973, 2019 WL 6173529, at *5 (D.D.C. Nov. 20, 2019) (applying the commercial acts exception for foreign governments to the defendant international organization pursuant to Jam v. Int’l Fin. Corp., 139 S. Ct. 759, 772 (2019)). But see Singer, supra note 19, at 63 (arguing that under the FSIA jurisprudence, all activities of international financial institutions may be deemed “commercial”). One can always hope, however, that Congress will preempt this possibility by amending the IOIA to reflect a coherent theory of restricted immunity. In doing so, it should also take the opportunity to correct the many weaknesses that have challenged the current commercial activities exception. See Joan E. Donoghue, Taking the “Sovereign” out of the Foreign Sovereign Immunities Act: A Functional Approach to the Commercial Activity Exception, 17 Yale J. Int’l L. 489, 493–94 (1992) (“United States courts have criticized the [current commercial activities exception] repeatedly for failing to provide them with adequate guidance as to how to determine the immunity of various transactions.”). Apparently, in 1990, Senator Roth proposed a bill to amend the IOIA to entitle international organizations to immunity under the FSIA. This bill, which would not have addressed the above concerns, was short-lived. See George B. Adams III, Plain Reading, Subtle Meaning: Rethinking the IOIA and the Immunity of International Organizations, 81 Fordham L. Rev. 241, 261 (2012) (briefly describing the attempt to amend the IOIA).
See, e.g., Treichl & Reinisch, supra note 10, at 135–36.
Although this Article could have designed a hypothetical surrounding human rights or environmental standards, it focuses on a labor rights case given reports that international organizations frequently carry out commercial activities that harm workers. See sources cited supra notes 1–2 and accompanying text.
See, e.g., Doug Stokes, Trump, American Hegemony and the Future of the Liberal International Order, 94 Int’l Affs. 133, 133–38 (2018) (describing the evolving views in the United States concerning its role as “hegemonic stabilizer”).
. See id.; Rachel Brewster, The Trump Administration and the Future of the WTO, 44 Yale J. Int’l L. Online 1, 1–3 (2018) (noting that President Trump “campaigned on an anti-international trade platform” and had called into question the robustness of the World Trade Organization).
See The Charter of the United Nations for the Maintenance of International Peace and Security: Hearings Before the Comm. on Foreign Rels., 79th Cong. 136 (1945).
See Okeke, supra note 5, at 356–57.
International Organizations Immunity Act, 22 U.S.C. § 288a(b).
See Donoghue, supra note 32, at 495–97.
See, e.g., Bernard Fensterwald, Jr., Sovereign Immunity and Soviet State Trading, 63 Harv. L. Rev. 614, 617, 627 (1950); Singer, supra note 19, at 138–40; Moshe Hirsch, The Responsibility of International Organizations Toward Third Parties 3–5 (1995).
From 1952 to 1976, the U.S. restrictive theory was implemented by the Executive Branch, and in 1976, the Foreign Sovereign Immunities Act was adopted. See Aaron I. Young, Note, Deconstructing International Organization Immunity, 44 Geo. J. Int’l L. 311, 315–18 (2012) (describing the evolution of foreign sovereign immunity in the United States).
Id. at 311; see also 28 U.S.C. § 1602.
See Keitner & Dodson, supra note 10, at 806 (“Under the restrictive theory, a foreign state is immune from suit for its sovereign acts (acta jure imperii), but not for its commercial acts (acta jure gestionis).”).
Id.; 28 U.S.C. § 1605(a)(2).
For a description of these expanded activities, see Singer, supra note 19, at 56; Hirsch, supra note 41, at 1–4.
See, e.g., Daphna Shraga, UN Peacekeeping Operations: Applicability of International Humanitarian Law and Responsibility for Operations-Related Damage, 94 Am. J. Int’l L. 406, 406 (2000) (discussing the attention surrounding enhanced U.N. peacekeeping activities in the mid-1990s, including accountability for harms caused by U.N. peacekeeping forces).
See Frederick Rawski, To Waive or Not to Waive: Immunity and Accountability in U.N. Peacekeeping Operations, 18 Conn. J. Int’l L. 103, 104–05 (2002) (noting the expansion of U.N. peacekeeping operations in the 1990s and associated concerns about necessary privileges and immunities).
See generally John D. Ciorciari, The Lawful Scope of Human Rights Criteria in World Bank Credit Decisions: An Interpretive Analysis of the IBRD and IDA Articles of Agreement, 33 Cornell Int’l L.J. 331, 331–32 (2000) (noting the longstanding debate over the World Bank’s role in the human rights arena); Eisuke Suzuki & Suresh Nanwani, Responsibility of International Organizations: The Accountability Mechanisms of Multilateral Development Banks, 27 Mich. J. Int’l L. 177, 180 (2005).
See, e.g., August Reinisch, Securing the Accountability of International Organizations, 7 Glob. Governance 131, 131–32 (2001) (arguing that the expansion of U.N. activities into peacekeeping activities resulted in potential fundamental rights abuses); Bradlow, supra note 19, at 57 (discussing the evolution of the activities of international organizations and associated questions of accountability, such as those that arose when U.N. activities led to “death and serious health problems” in Haiti and Kosovo).
Despite legislation, the scope of those waivers was at first unclear, since the D.C. Circuit initially interpreted the waivers broadly until Mendaro, when the court interpreted the waivers more narrowly. Subsequently, in Osseiran, the court expanded the potential types of plaintiffs in these cases. See infra pp. 67–69.
See, e.g., Articles of Agreement of the International Bank for Reconstruction and Development art. VII, § 3, Dec. 27, 1945, 60 Stat. 1440, 2 U.N.T.S. 134; Articles of Agreement of the IFC art. VI, § 3, July 20, 1965, 264 U.N.T.S. 117 [hereinafter IFC Articles of Agreement].
IFC Articles of Agreement, supra note 52.
Agreement Establishing the Inter-American Bank art. XI, § 3, Apr. 8, 1959, 10 U.S.T. 3029.
See supra notes 52–54 (citing judicial processes of the IBRD, IFC, and IDB).
See, e.g., International Finance Corporation Act, 22 U.S.C. §§ 282, 282f; Brief for the United States as Amicus Curiae Supporting Reversal at 7, Jam v. Int’l Fin. Corp., 139 S. Ct. 759 (2019) (No. 17-1011).
Carson Young, The Limits of International Organization Immunity: An Argument for a Restrictive Theory of Immunity Under the IOIA, 95 Tex. L. Rev. 889, 899–900 (2017) (describing the evolution of court decisions interpreting the charter-based immunity provision).
Lutcher S. A. Celulose e Papel v. Inter-Am. Dev. Bank, 382 F.2d 454, 457 (D.C. Cir. 1967).
Mendaro v. World Bank, 717 F.2d 610, 611–20 (D.C. Cir. 1983).
See Jan Klabbers, The EJIL Foreword: The Transformation of International Organizations Law, 26 Eur. J. Int’l L. 9, 58–59 (2015) (discussing Mendaro, arguing that “if immunity from suit was to be justified in functionalist terms, so too was the absence of immunity – both were reducible to functionalist logic and both were built upon functionalist premises”).
Mendaro, 717 F.2d at 615.
Id. at 617.
Id. at 615.
Atkinson v. Inter-Am. Dev. Bank, 156 F.3d 1335, 1338 (D.C. Cir. 1998), abrogated by Jam v. Int’l Fin. Corp., 139 S. Ct. 759 (2019).
Id. at 1337.
Id. at 1338–39.
Id. at 1341–42. In doing so, the court overruled its previous precedent in which it found that the IOIA incorporated the same theory of restrictive immunity as incorporated in the FSIA. Id. at 1341 & n.6 (overruling Rendall-Speranza v. Nassim, 932 F. Supp. 19, 23–25 (D.D.C. 1996)).
Atkinson, 156 F.3d at 1340 (quoting 2B Norman J. Singer, Statutes and Statutory Construction § 51.08 (5th ed. 1992)).
Id. at 1341 (“In light of this text and legislative history, we think that . . . Congress’ intent was to adopt that body of law only as it existed in 1945—when immunity of foreign sovereigns was absolute.”).
Id. (citation omitted).
Osseiran v. Int’l Fin. Corp., 552 F.3d 836 (D.C. Cir. 2009).
Id. at 840; Mendaro v. World Bank, 717 F.2d 610, 615 (D.C. Cir. 1983).
Osseiran, 552 F.3d at 840.
See, e.g., Anthony Cooper, Jam v. International Finance Corporation*: Access to Remedy, but Only When We Say So*, 26 Tul. J. Int’l & Compar. L. 417, 423–24 (2018) (describing divergent jurisprudence after Atkinson).
OSS Nokalva, Inc. v. Eur. Space Agency, 617 F.3d 756, 762, 764 (3d Cir. 2010).
Id. at 763.
Id. at 766.
See generally Broadbent v. Org. of Am. States, 628 F.2d 27 (D.C. Cir. 1980) (raised in an amicus curiae brief by the United States).
See, e.g., Steven Herz, International Organizations in U.S. Courts: Reconsidering the Anachronism of Absolute Immunity, 31 Suffolk Transnat’l Rev. 471, 496–532 (2008); Young, supra note 57, at 901–08; John C. Griffith, Jr., Note, Restricting the Immunity of International Organizations in Labor Disputes: Reforming an Obsolete Shibboleth, 25 Va. J. Int’l L. 1007, 1016–17 (1985) (“Congress intended the IOIA to follow the trend toward restrictive immunity.”).
Jam v. Int’l Fin. Corp., 139 S. Ct. 759, 770, 772 (2019).
Jam v. Int’l Fin. Corp., 860 F.3d 703, 704 (D.C. Cir. 2017).
See Off. of the Compliance Advisor Ombudsman, Ombudsman Assessment Report Regarding Community and Civil Society Concerns in Relation to IFC’s Tata Ultra Mega Project (#25797) 4 (2012), http://www.cao-ombudsman.org/cases/document-links/documents/TataDraftAssessmentReport_January_2012FINAL.pdf [https://perma.cc/8JRU-NXLS].
Jam, 860 F.3d at 704.
Id. at 705–06, 708 (quoting Atkinson v. Inter-Am. Dev. Bank, 156 F.3d 1335, 1340 (D.C. Cir. 1998)).
Justice Breyer dissented; Justice Kavanaugh recused himself. Jam v. Int’l Fin. Corp., 139 S. Ct. 759, 764 (2019).
Id. at 768–70, 772.
Id. at 769.
Id. at 771–72.
Id. at 771.
Id. at 772.
Jam v. Int’l Fin. Corp., 442 F. Supp. 3d 162, 17071 (D.D.C. 2020) (quoting 28 U.S.C. § 1605(a)(2) (2018)).
Id. at 171.
Id. at 174, 179.
Id. at 176.
Id. at 168, 176.
Id. at 176.
Id. at 179 n.5.
Id. (quoting Jam v. Int’l Fin. Corp., 860 F.3d 703, 708 (D.C. Cir. 2017)).
See supra Part I.
See infra Section III.A. For a discussion of the legislative history of those waivers and the intention for those waivers to “restrict immunity to suits that did not relate to the organizations’ lending activities,” see Treichl & Reinisch, supra note 10, at 116–17.
See infra Section III.A.
In its amici curaie brief in Jam, the Multilateral Investment Guarantee Agency (MIGA) argues the opposite. See MIGA Brief, supra note 23, at 17–18. Referencing the process under which some member states fund the activities of international financial institutions and other countries “principally benefit” from those activities, MIGA argues that other contributing members would be less likely to continue making their contributions if those contributions could be diverted to the “costs of fending off lawsuits.” Id. at 18. That argument presupposes that liability costs will be taken from the regular budget of an international financial institution. It has yet to be determined if and how international organizations will provide for a monetary mechanism for litigation. Therefore, it is not possible to rebut allegations of distributive costs. MIGA also argues that permitting a contributing member state to supervise those activities will disrupt “the delicate [balance] of diplomacy” at play in funding projects. Id. That very well may be true, but any disruption is just as possible in instances when one contributing member state—such as the United States—has such a relatively powerful share of votes as to hold an unequal influence over projects at the outset. Again, that imbalance preexisted Jam.
See infra note 138 and accompanying text.
See, e.g., Multilateral Inv. Guarantee Agency [MIGA], Convention Establishing the Multilateral Investment Guarantee Agency, at 1–3 (Nov. 14, 2010), https://www.miga.org/sites/default/files/archive/Documents/MIGA Convention (April 2018).pdf [https://perma.cc/R89V-G7W6] (“Considering the need to strengthen international cooperation for economic development and to foster the contribution to such development of foreign investment in general and private foreign investment in particular.”). See generally Üner Kirdar, The Structure of United Nations Economic-Aid to Underdeveloped Countries 179 (1966); J. Henry Glazer, A Functional Approach to the International Finance Corporation, 57 Colum. L. Rev. 1089, 1104 (1957) (“IFC portends the basic social fact that international law and municipal law, public affairs and private affairs, political activity and economic activity, have become inextricably mixed up.”).
See, e.g., IFC Articles of Agreement, supra note 52, art. I; Loans, IFC, https://www.ifc.org/wps/wcm/connect/CORP_EXT_Content/IFC_External_Corporate_Site/Solutions/Products+and+Services/Loans [https://perma.cc/UT7L-9ECD] (last visited Sept. 3, 2020) (discussing IFC operations in “financ[ing] projects and companies through loans from our own account, typically for seven to 12 years.”).
For example, the IFC’s charter provides it with the mandate to “further economic development by encouraging the growth of productive private enterprise in member countries, particularly in the less developed areas.” IFC Articles of Agreement, supra note 52, art. I.
See id. art. II, §§ 2–3 (prescribing the value of its capital stock and requiring member states to subscribe to those shares); Sarah Babb, Behind the Development Banks 21, 24 (2009) (noting that the boards of directors invest in the multilateral development banks’ capital stock of the institutions and “secure access to financing”).
The IFC’s charter, for instance, assigns each member votes consisting of share votes (one vote for each share of IFC’s capital stock held by the member) plus basic votes (calculated so that the sum of all basic votes is equal to 5.55% of the sum of basic votes and share votes for all members). IFC Articles of Agreement, supra note 52, art. IV, § 3; see also Voting Powers, World Bank, https://www.worldbank.org/en/about/leadership/votingpowers [https://perma.cc/5UK7-47LM] (last visited Sept. 4, 2020).
For a list of these responsibilities, see Boards at Work, World Bank, https://www.worldbank.org/en/about/leadership/directors/boards-at-work (last visited Sept. 4, 2020) [https://perma.cc/C6SG-YCLL].
Babb, supra note 118, at 24.
See Articles of Agreement of the IMF, art. IX, § 3, July 22, 1944, 60 Stat. 1401, 2 U.N.T.S. 39 (as amended through Jan. 26, 2016).
See supra Section III.A.
See generally Mendaro v. World Bank, 717 F.2d 610, 618 (D.C. Cir. 1983) (“[The World Bank’s] guarantee would mean little if beneficiaries of the guarantee could not sue to enforce the Bank’s contracts.”).
See supra text accompanying note 55.
See supra text accompanying notes 16–17.
As mentioned, some organizations such as the U.N. and the IMF retain full immunity pursuant to their charters. See supra text accompanying note 123; U.N. Charter art. 105, ¶ 1 (“The Organization shall enjoy in the territory of each of its Members such privileges and immunities as are necessary for the fulfilment of its purposes.”).
See supra Section II.A.
See supra Sections II.A–B.
See supra notes 10–23 and accompanying text.
See infra note 141 and accompanying text.
See About IFC: Overview, Int’l Fin. Corp., https://www.ifc.org/wps/wcm/connect/corp_ext_content/ifc_external_corporate_site/about+ifc_new [https://perma.cc/7KQW-KSGC] (last visited July 3, 2020).
See Kirdar, supra note 115, at 175; supra text accompanying note 40; infra note 141 and accompanying text.
See IFC Articles of Agreement, supra note 52, art. III, §§ 1, 3.
See EDS01: About, World Bank https://www.worldbank.org/en/about/leadership/directors/eds01 [https://perma.cc/5Y6W-HY39] (last visited Dec. 3, 2019).
See William Ascher, The World Bank and U.S. Control, in The United States and Multilateral Institutions: Patterns of Changing Instrumentality and Influence 78, 80 (Margaret P. Karns & Karen A. Mingst eds., 2005) (“From its founding in the late 1960s, because of the importance of the U.S. role, the World Bank was viewed by many largely as an appendage of the U.S. government, one the United States could use to achieve its objectives.”).
In the IFC, for instance, each member government receives votes consisting of share votes, i.e., one vote for each share of the capital stock held by the government, plus basic votes. Out of 185 member states with shares, the United States contributes over 22% and has approximately 21% of the voting power. See IFC, Subscriptions and Voting Power of Member Countries (Sept. 2, 2020), http://pubdocs.worldbank.org/en/280961541106482420/IFCCountryVotingTable.pdf [https://perma.cc/XC2G-H4D3]; Voting Powers, World Bank, https://www.worldbank.org/en/about/leadership/votingpowers [https://perma.cc/EP5M-KCHC] (last visited Dec. 3, 2019).
See The World Bank in United States: Overview, World Bank, https://www.worldbank.org/en/country/unitedstates/overview [https://perma.cc/5N9Z-WTQD] (Feb. 10, 2017).
See Martin A. Weiss, Cong. Rsch. Serv., R42463, Selecting the World Bank President 3 (2019), https://crsreports.congress.gov/product/pdf/R/R42463 [https://perma.cc/QCM9-73QC]. For an in-depth discussion of the politics behind United States approaches to multilateral development banks, see Babb, supra note 118, at 20–21, 148–79.
See IFC, 2005 Sustainability Report 14 (2005), https://www.scribd.com/fullscreen/16944917?access_key=key-1duzq2vi5a8mn4yookx3 [https://perma.cc/HZ6Z-6VH5]; Boards at Work, supra note 120.
See S. Rep. No. 115-282, at 78–79 (2018). For a critique of the “scores of instructions” that Congress has enacted to direct Bank policy, see Kristina Daugirdas, Congress Underestimated: The Case of the World Bank, 107 Am. J. Int’l L. 517, 519 (2013). Congress first introduced this statutory requirement in 1994, based on an amendment introduced by senators Bernie Sanders and Barney Frank. See Babb, supra note 118, at 170.
See 22 U.S.C. §§ 262p–4p, 262o–2(a)(9). Previous appropriations bills have gone further and required the executive director to “evaluate borrowing member countries’ recognition of internationally recognized worker rights, and to include the status of such rights as an integral part of the [international organization’s] policy dialogue with each borrowing country.” U.S. Dep’t of the Treasury, FY2010 Report to Congress on Labor Issues and the International Financial Institutions 3–4, 17 (2011), https://www.treasury.gov/resource-center/international/development-banks/Documents/20110131 FY2010 Labor Report.pdf [https://perma.cc/3W92-SJL2].
22 U.S.C. § 262p–4p(a); 19 U.S.C. § 2467(4).
22 U.S.C. § 262p–4p(a)(1).
Id. § 262p–4p(a)(3).
U.S. Dep’t of the Treasury, supra note 142, at 5.
See 22 U.S.C. § 262m–7(c)(2).
See S. Rep. No. 115-282, at 78–79 (2018).
See Franz Christian Ebert & Anne Posthuma, Labour Standards and Development Finance Institutions: A Review of Current Policies and Activities 1 (Int’l Inst. for Labour Stud., Working Paper No. DP 204, 2010) (noting that the members of multilateral development banks such as the IFC began integrating labor standards and other social policy concerns into their operations in response to international pressure).
See Environmental and Social Sustainability Policy, Int’l Fin. Corp., https://www.ifc.org/wps/wcm/connect/Topics_Ext_Content/IFC_External_Corporate_Site/Sustainability-At-IFC/Policies-Standards/Sustainability-Policy/ [https://perma.cc/R46B-45NY] (last visited Dec. 3, 2019).
See Performance Standards, Int’l Fin. Corp., https://www.ifc.org/wps/wcm/connect/Topics_Ext_Content/IFC_External_Corporate_Site/Sustainability-At-IFC/Policies-Standards/Performance-Standards [https://perma.cc/R8M5-4QZV] (last visited Dec. 3, 2019).
See How to Apply for Financing, Int’l Fin. Corp., https://www.ifc.org/wps/wcm/connect/corp_ext_content/ifc_external_corporate_site/solutions/how-to-apply-for-financing [https://perma.cc/2CT5-FRFP] (last visited Dec. 3, 2019). According to interviews with IFC senior staff, if a potential client does not meet the criteria at the outset, the IFC will still consider funding a project with that client so long as there is “willingness of a business to bring its operations into conformity and the likelihood that appropriate mitigation measures can be agreed and put in place.” See Conor Cradden et al., Governance by Contract? The Impact of the International Finance Corporation’s Social Conditionality on Worker Organization and Social Dialogue 6 (Mar. 2015) (Université de Lausanne, Working Paper), https://serval.unil.ch/resource/serval:BIB_3D5BD15A82A3.P001/REF.pdf [https://perma.cc/B8KK-3RZA].
See IFC, Performance Standard 2: Labor and Working Conditions, at i (2012) [hereinafter Performance Standard 2], https://www.ifc.org/wps/wcm/connect/88f1f09e-5fe4-4fad-9286-33ecb221ab23/PS2_English_2012.pdf?MOD=AJPERES&CVID=jiVQIns [https://perma.cc/KRJ5-CXFZ]; Ebert & Posthuma, supra note 150, at 2, 3 tbl.1.
See IFC, Policy on Environmental and Social Sustainability, ¶¶ 30, 45 (2012) [hereinafter IFC Sustainability Policy], https://www.ifc.org/wps/wcm/connect/7141585d-c6fa-490b-a812-2ba87245115b/SP_English_2012.pdf?MOD=AJPERES&CVID=kiIrw0g [https://perma.cc/B5SE-VLV2].
Id. ¶ 12.
Id. ¶ 24.
See Performance Standard 2, supra note 156.
Id. at 2–5.
Id. at 1–2 (footnote omitted).
The CAO also monitors projects for the Multilateral Investment Guarantee Agency (MIGA). See About the CAO: Who We Are, Compliance Advisor Ombudsman, http://www.cao-ombudsman.org/about/whoweare/ [https://perma.cc/MR7T-GHAA] (last visited Dec. 3, 2019).
See Compliance Advisor Ombudsman, CAO Operational Guidelines 10 (2000), http://www.cao-ombudsman.org/howwework/documents/CAOOperationalGuidelines2013_ENGLISH.pdf [https://perma.cc/SB5U-GKUC] [hereinafter CAO Operational Guidelines].
This assessment focuses exclusively on the IFC’s conduct, not the client’s conduct. Id. at 13–14; Cradden et al., supra note 155, at 7–8.
See Compliance Advisor Ombudsman, supra note 164, at 14
See id. at 14, 25 (specifying the CAO’s permitted follow up actions in the event of noncompliance include only that the CAO keep the case open).
See, e.g., Treichl & Reinisch, supra note 10, at 135–36 (while conceding the weaknesses in the CAO, arguing that internal mechanisms were superior to national courts as a venue for project-affected people to seek remedies against international financial institutions). But see Reinisch, supra note 22, at 579–81 (noting that concerns over the competence of state courts neglects to consider that many of those lawsuits will involve questions of simple contract or tort claims, areas in which the character of the defendant is “of marginal relevance”).
In his 2019 report, Franz Ebert examines all of the open cases before the CAO and concludes that “for none of the cases analysed was there clear evidence available suggesting that the workers’ complaints had been addressed . . . further to the CAO’s investigation report.” Franz Christian Ebert, Labour Safeguards of International Financial Institutions: Can They Help to Avoid Violations of ILO Core Labour Standards?, in European Yearbook of International Economic Law 107, 127 (2019); see also Treichl & Reinisch, supra note 10, at 125 (“[The IFC’s CAO] lacks any coercive possibility of tackling failure to act or even of accelerating the progress that may or may not be made over time.”); World Bank–IMF Development Committee Stresses Institutional Accountability at Spring Meetings, Amid Planned IFC Reforms, Int’l Inst. Sustainable Dev. (May 13, 2019), https://www.iisd.org/library/imf-world-bank-accountability [https://perma.cc/7RXT-JJV3] (“Mechanisms like the CAO lack the authority to terminate projects or decide on appropriate remedies, nor do they have in place procedures to enforce the implementation of their advice.”).
See Ebert, supra note 169, at 125 (25% of the labor-related cases filed before the CAO between 2001 and 2018 remain pending).
See supra Section III.B.
See supra Section III.B.
See supra note 20 and accompanying text.
For a discussion of the various societal and systemic costs associated with extraterritorial litigation, see Curtis A. Bradley, The Costs of International Human Rights Litigation, 2 Chi. J. Int’l L. 457, 460–61, 469–73 (2001).
The D.C. Circuit Court has held that “jurisdictional discovery may be warranted only in comparatively rare circumstances” and applies a high threshold for plaintiffs to establish “a specific, well-founded allegation,” at least in the context of waivers of immunity. See Nyambal v. Int’l Monetary Fund, 772 F.3d 277, 281 (D.C. Cir. 2014) (internal citations omitted) (holding that plaintiff failed to satisfy its burden under the court’s “specific, well-founded allegation” standard).
See, e.g., Jens Dammann & Henry Hansmann, Globalizing Commercial Litigation, 94 Cornell L. Rev. 1, 30 (2008) (“[T]he firm will often want lawyers who are also familiar with local law and institutions.”).
In their amicus curiae brief to the Supreme Court, a group of international law professors acknowledged this limiting factor. See Brief of Professors, supra note 23, at 31–32 (“Judicial application of the FSIA’s criteria in suits against [international organizations] would not open the floodgates to litigation lacking a genuine connection to the United States.”).
Under Alien Tort Statute cases, for instance, plaintiffs must establish that their allegations “touch and concern” the United States. See Kiobel v. Royal Dutch Petroleum Co., 569 U.S. 108, 124–25 (2013); cf. Roe v. Bridgestone Corp., 492 F. Supp. 2d 988, 998–99 (S.D. Ind. 2007) (dismissing plaintiff’s Thirteenth Amendment claim because the involuntary servitude did not take place “within the United States, or any place subject to their jurisdiction”). This jurisprudence has been strongly criticized by human rights advocates who argue that U.S. jurisprudence misses the opportunity to hold multinational corporations liable for global rights abuses. See, e.g., Anna Grear & Burns H. Weston, *The Betrayal of Human Rights and the Urgency of Universal Corporate Accountability: Reflections on a Post-*Kiobel Lawscape, 15 Hum. Rts. L. Rev. 21, 24 (2015) (reflecting on Kiobel, noting “the Court closed down, prima facie at least, a much favoured strategy of international human rights litigation aimed at establishing extraterritorial human rights accountability”). Further, under the doctrine of forum non conveniens, federal courts are quick to dismiss cases that, for public and private considerations, favor the jurisdiction of a foreign court. For at least one prediction that many post-Jam cases will fail to land in U.S. courts under that doctrine, see Keitner & Dodson, supra note 10, at 809–10. However, that prediction assumes that the nature of the allegations against international organizations will center on the tortious conduct carried out abroad. Id. They fail to consider a separate theory of litigation, described in this Part, which centers on the contractual activities carried out in the United States.
Given that this case awaits further CAO compliance monitoring, it remains within the realm of possibility that the IFC will take additional corrective action. This Article makes no prediction either way. Rather, it borrows the facts of that case for the purpose of illustration.
To justify jurisdiction, plaintiffs must establish standing to sue, otherwise courts may dismiss the case under Rules 12(b) or 56. Fed. R. Civ. P. 12(b)(1) (permitting dismissal for “lack of subject-matter jurisdiction”); id. at 12(b)(6) (permitting dismissal for “failure to state a claim upon which relief can be granted”); id. at 56 (permitting dismissal for “no genuine dispute [exists] as to any material fact”); see also, e.g., Am. Fed’n Gov’t Emps., Local 2119 v. Cohen, 171 F.3d 460, 465 (7th Cir. 1999). The party invoking jurisdiction has the burden of proving that jurisdiction. See, e.g., Grafon Corp. v. Hausermann, 602 F.2d 781, 783 (7th Cir. 1979).
To establish standing under Federal Rule of Civil Procedure 12(b), plaintiffs must also establish that the defendant’s misconduct caused them injury. See, e.g., United States ex rel. Rockefeller v. Westinghouse Elec. Co., 274 F. Supp. 2d 10, 14 (D.D.C. 2003) (dismissing plaintiff’s case under Federal Rule of Civil Procedure 12(b)(1) because he could not establish personal injury).
For instance, in Saudi Arabia v. Nelson, the Saudi government recruited the plaintiff and signed his employment contract in the United States. He then moved to Saudi Arabia to work at a hospital. Saudi Arabia v. Nelson, 507 U.S. 349, 351–52 (1993). While in Saudi Arabia, the Saudi government allegedly summoned him, transported him to a jail cell, and tortured him. Id. at 352–53. Holding that the government was immune under the FSIA, the Court relied on the fact that the complaint did not involve the “commercial activity ‘carried on in the United States,’” only the personal injury in Saudi Arabia. Id. at 354, 356, 358, 361, 363.
See supra note 182 and accompanying text.
By incorporating its labor rights commitments into its contracts, the IFC has accepted that obligation. Performance Standard 2, supra note 156, at 1. Accordingly, the factual questions of whether the IFC promised the U.S. executive director to abide by those commitments, and whether the United States voted for the project based on those promises, do not control whether the IFC is so bound.
See CAO Assessment Report, supra note 3, at 5.
The contract is not publicly available. However, the CAO Assessment Report explains that the project was between the IFC and the employer. See id.
See Anthony Jon Waters, The Property in the Promise: A Study of the Third Party Beneficiary Rule, 98 Harv. L. Rev. 1109, 1113 (1985).
Daniela Caruso, Non-Parties: The Negative Externalities of Regional Trade Agreements in a Private Law Perspective, 59 Harv. Int’l L.J. 389, 401 (2018) (describing the literature addressing harm caused to nonparties under contract rules).
Restatement (Second) of Contracts § 304 (Am. Law Inst. 1981).
Id. § 308.
Montana v. United States, 124 F.3d 1269, 1273 (Fed. Cir. 1997); Cnty. of Santa Clara v. Astra USA, Inc., 588 F.3d 1237, 1244 (9th Cir. 2009).
See Performance Standard 2, supra note 156, at 1–2. By strictly defining categories of workers in the terms of their contracts, the IFC has made it easier for groups of workers, such as the Nigerians, to demonstrate that they were intended beneficiaries under the contract. The drawback of this strategy is, of course, that those groups of workers falling outside of the contract’s definition of “worker” (such as certain subcontracted workers) will not have access to courts under a contract claim. These groups of workers will be particularly vulnerable to abuse and lack of accountability. For a discussion of the limited scope of accountability to various categories of workers under the IFC’s Sustainability Policy, see Ebert, supra note 169, at 115–18.
See CAO Assessment Report, supra note 3, at 5; Performance Standard 2, supra note 156, at 1.
See Waters, supra note 187, at 1113.
Securities Exchange Act of 1934, Pub. L. No. 291, ch. 404 tit. I, § 6, 48 Stat. 881, 885.
Waters, supra note 187, at 1178–84.
Id. at 1184*.*
Chen v. Street Beat Sportswear, Inc., 226 F. Supp. 2d 355, 357, 361 (E.D.N.Y. 2002).
Id. at 358.
Id. at 365 (citing Owens v. Haas, 601 F.2d 1242, 1250 (2d Cir. 1979)).
Id. at 363, 366.
Id. at 363–64.
Restatement (Second) of Contracts, supra note 189, § 302(1).
Doe I v. Wal-Mart Stores, Inc., 572 F.3d 677, 680 (9th Cir. 2009).
Id. at 680–81.
Id. at 681–82.
See generally Performance Standard 2, supra note 156 (providing an overview of the IFC’s standards for labor and working conditions); IFC Sustainability Policy, supra note 157 (providing an overview of the IFC’s policy on environmental and social sustainability).
See IFC Sustainability Policy, supra note 157, ¶ 12.
Id. ¶ 24.
See Waters, supra note 185, at 1178 & n.315.
As with standing, U.S. courts may dismiss cases for lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1) when the international organization did not engage in commercial activity and did not fall under an applicable exception to immunity. See, e.g., Zhan v. World Bank, No. 19-cv-1973, 2019 WL 6173529, at *2 (D.D.C. Nov. 20, 2019).
See Jam v. Int’l Fin. Corp., 442 F. Supp. 3d 162, 170 (D.D.C. 2020); Zhan, 2019 WL 6173529, at *2. Again, ideally Congress will amend the IOIA after Jam to acknowledge the incorporation of at least some FSIA exceptions to immunity. For a description of the dangers of applying FSIA jurisprudence to international organizations cases, see Brief of International Law Experts, supra note 11, at 18.
28 U.S.C. §§ 1603, 1605(a)(2).
Id. § 1605(a)(2); Jam v. Int’l Fin. Corp., 139 S. Ct. 759, 772 (2019).
See Donoghue, supra note 32, at 499–516; 17 Peter H.F. Bekker, The Legal Position of Intergovernmental Organizations 160 (1994).
See Republic of Argentina v. Weltover, Inc., 504 U.S. 607, 612 (1992).
Saudi Arabia v. Nelson, 507 U.S. 349, 357 (1993).
See Donoghue, supra note 32, at 499–516.
Jam v. Int’l Fin. Corp., 442 F. Supp. 3d 162, 171–72 (D.D.C. 2020).
Id. at 175–76.
Id. at 177–79.
Id. at 178.
See id. at 178.
See id. at 174.
The D.C. Circuit has consistently denied breach of contract claims under the FSIA for failure to establish that breach of contract actions beyond negotiation took place in the United States. See, e.g., Kettey v. Saudi Ministry of Educ., 53 F. Supp. 3d 40, 51–52 (D.D.C. 2014) (holding that plaintiff failed to satisfy FSIA criteria because it failed to establish that the elements of the breach of contract claim that would entitle it to relief were based in the United States).
See Cooper, supra note 77, at 418*.*
See Donoghue, supra note 32, at 500.
See Republic of Argentina v. Weltover, Inc., 504 U.S. 607, 614 (1992).
Id. at 615.
Id. at 608, 615–17.
See Herz, supra note 82, at 526.
Jam v. Int’l Fin. Corp., 139 S. Ct. 759, 772 (2019).
See Jam v. Int’l Fin. Corp., 442 F. Supp. 3d 162, 171 n.2 (D.D.C. 2020).
See Statement of Interest of the United States of America at 8 n.2, Jam v. Int’l Fin. Corp., 442 F. Supp. 3d 162 (D.D.C. 2020).
Id. (quoting 28 U.S.C. § 1605(a)(2)).
See id. at 7.
See Jam, 442 F. Supp. 3d at 179.
Jam v. Int’l Fin. Corp., 139 S. Ct. 759, 770 (2019).
See Jam, 442 F. Supp. 3d at 179 n.5 (“[T]he Supreme Court’s decision in Jam interpreting the IOIA did not overturn the D.C. Circuit’s corresponding benefits test for waivers of immunity in international treaties . . . .”).
See, e.g., Mendaro v. World Bank, 717 F.2d 610, 615 (D.C. Cir. 1983).
See generally Osseiran v. Int’l Fin. Corp., 552 F.3d 836, 840 (D.C. Cir. 2009) (explaining that the IFC’s representations during its project negotiations are critical to its functioning, and thus “asserting claims arising out of that category of activity” could attract “prospective investors by reinforcing expectations of fair play”).
See Brief of International Law Experts, supra note 11, at 19–20.
See Mendaro, 717 F.2d at 618.
See Singer, supra note 19, at 137.
Id. at 138.
From a policy perspective, all potential investors and shareholders should be wary of investing in finance projects that fail to protect labor rights. See generally David Kucera, Core Labour Standards and Foreign Direct Investment, 141 Int’l Labour Rev. 31, 33 (2002) (examining foreign direct investment flows and concluding that the balance of evidence suggests that such investment tends to be greater in countries with stronger labor rights). To be clear, this does not imply that those countries would want international organizations subjected to suit in the United States, per se. In fact, that could be a drawback given the poor reputation of torts litigation in the United States. Instead, my argument is broader. Financing governments require litigable accountability for the contractual commitments of recipient institutions in an appropriate venue, which will turn on facts and jurisdiction.
See Zafiris Tzannatos, The Impact of Trade Unions: What Do Economists Say?, in In Defence of Labour Market Institutions, at 150, 175 (“[B]argaining coordination reduces strike activity; in turn, a high level of strikes impacts negatively on economic outcomes (in the sense of higher rates of inflation, unemployment and growth in earnings) . . . .” (footnote omitted)); Int’l Labour Org., Freedom of Association and Development 28 (2011), https://www.ilo.org/wcmsp5/groups/public/---ed_norm/---declaration/documents/publication/wcms_160208.pdf [https://perma.cc/B6J3-H4Z5] (explaining that good employment conditions minimize industrial tension and days of production lost over strikes).
But see Keitner & Dodson, supra note 10, at 811 (“Restrictive immunity’s residual risk of liability may have the salutary effect of prompting [international organizations] to improve their internal accountability mechanisms.”). For an opposite prediction, see Treichl & Reinisch, supra note 10, at 136 (“Just like an absolute immunity shield, possibly extensive amenability to suit will hardly incentivize [multilateral development banks] to establish more effective means of dispute settlement.”).
See Keitner & Dodson, supra note 10, at 809 (arguing that international organizations may be “formed through founding charters that specify expanded immunities” to avoid the impact of Jam); Singer, supra note 19, at 109 (arguing that the members of international organizations have the power to amend constituent instruments to redefine immunities).
See Klabbers, supra note 15, at 44 (disagreeing with theories that treat international organizations as separate entities, arguing that they are actually organizations directed by their member states).
For a description of the internal organs of international organizations and their mandate to take binding and nonbinding decisions concerning the scope and powers of their organizations, see Inger Österdahl, International Organizations – Institutions and Organs, in Research Handbook, supra note 11, at 156, 174–82.
See Singer, supra note 19, at 142.
See World Bank/IMF Spring Meetings 2019: Development Committee Communiqué, World Bank (Apr. 13, 2019), https://www.worldbank.org/en/news/press-release/2019/04/13/world-bankimf-spring-meetings-2019-development-committee-communiq
See Philippe Le Houérou, Opinion: At IFC, Accountability Is of Utmost Importance, Devex (Apr. 10, 2019), https://www.devex.com/news/opinion-at-ifc-accountability-is-of-utmost-importance-94667 [https://perma.cc/7EGR-YE9H].