Editor’s Note: In view of this landmark SCOTUS decision yesterday, this post is a brief deviation from our ongoing Symposium for the ESIL Interest Group on Migration and Refugee Law on the UN Global Compacts on Migration and Refugees: The Twin Peaks?. We immediately continue with the Symposium after this post.
When it rains, it somehow pours. February 2019 ended up being such a landmark month for international law adjudication. A day after the International Court of Justice released its landmark Chagos Advisory Opinion (finely discussed by Marko Milanovic here), the Supreme Court of the United States (SCOTUS) issued its 27 February 2019 decision in Jam et al. v. International Finance Corporation, (586 U.S. ___ 2019). The decision squarely rejects the defense of absolute immunity invoked by the International Finance Corporation (IFC) through the United States’ International Organizations Immunities Act (IOIA) of 1945, with respect to a damages suit for negligence, nuisance, trespass, and breach of contract filed in 2015 before the US District Court for the District of Columbia, by a group of farmers and fishermen in India (with assistance from the NGO EarthRights), concerning the IFC’s inadequate supervision of the environmental and social action plan over its US$450 million loan to construct a coal-fired power plant in the state of Gujarat. The damages suit invokes the IFC’s own internal audit through the Compliance Advisor Ombudsman (CAO), admitting that the IFC did not adequately supervise the environmental and social action plan for the project.
Last week, I wrote about the evidence from Inspection Panel’s body of investigation reports in about 131 cases thus far, showing ongoing gaps between the World Bank’s articulated commitments to Agenda 2030 and the Paris Agreement, with its actual operational practices in environmental and social action compliance methods that deliberately refuse to internalize the actual international human rights, environmental, climate change, and labor obligations of States in the Bank’s lending operations for development projects. In this respect, the SCOTUS decision is of landmark impact, because it opens the door for US courts to potentially determine the nature of the IFC’s legal responsibilities beyond the lines of accountability internally designed at the World Bank through the independent Inspection Panel or the compliance auditing process at the CAO. Whether or not the suits will prosper on the merits, of course, is another matter altogether, noting how business and human rights litigation strategies have evolved in the United States after SCOTUS decisions in Kiobel v. Royal Dutch Petroleum and Jesner v. Arab Bank PLC.
There are also caveats to the decision itself, as carefully penned by SCOTUS Chief Justice Roberts. When one goes through the Court’s reasoning, the Court also signaled that “restrictive immunity hardly means unlimited exposure to suit for international organizations.”