U.S.

Court Rejects Absolute Immunity For

International Organizations
blog by Marco Simons, August 23, 2010

In a decision with potentially far-reaching implications, a U.S. court recently

rejected the idea that international organizations enjoy absolute immunity
from suit in the United States. The U.S. Court of Appeals for the Third Circuit,
one of the appellate courts that sits between the federal trial courts and the
Supreme Court, decided in OSS Nokalva, Inc. v. European Space Agency that
international organization immunity is subject to the same exceptions as
foreign states. That may sound obscure, but international organizations
include institutions such as the World Bank, and some of the immunity
exceptions could open up these institutions to significant new levels of
accountability.

A bit of background here: In 1945, early in the development of the modern

international system, the U.S. enacted the International Organizations
Immunities Act (IOIA). The IOIA was passed, in part, to reassure the United
Nations and other new global agencies that it was safe for them to have staff
(and often headquarters) in the United States. The law states that such
organizations will have the "same immunity" from suit as foreign states.

But what does that mean? The traditional practice was that foreign states,
like diplomats, had absolute immunity from lawsuits. The only exception was
if the U.S. government told the court not to recognize immunity; because the
immunity of foreign states (also known as "foreign sovereign immunity") is
designed to protect U.S. foreign policy, the U.S. government can decide that
it's not necessary in a particular case.

By 1945, that practice was already changing, in two ways. First, the U.S.
government was more frequently waiving foreign sovereign immunity;
second, in cases where the U.S. government said nothing, the courts were
developing general rules based on the government's past practice. Finally, in

1976, Congress decided to enact these rules in a new statute, the Foreign
Sovereign Immunities Act (FSIA), which ended the case-by-case evaluation of
immunity by the U.S. government. The FSIA creates a general rule of
immunity as well as a series of well-defined exceptions that the courts can
apply.

So where does that leave the IOIA now? In a notorious decision in 1998, the
U.S. Court of Appeals for the District of Columbia Circuit decided that the IOIA
was still stuck in 1945, or even before 1945, and that international
organizations still enjoyed absolute immunity. In that case, Atkinson v. InterAmerican Development Bank, a woman tried to garnish the wages of her
deadbeat ex-husband, who was refusing to pay child support and alimony
despite a high-paying job at the IDB. Such a case would have a reasonable
chance of succeeding if the ex-husband were employed by a foreign state,
due to some of the exceptions in the FSIA, but the D.C. Circuit said that the
IOIA--even though it says the "same immunity" as foreign states--really
means that international organizations get the immunity that foreign states
used to get before these exceptions arose.

This means, of course, that any international organization can get away with
any wrongful conduct, and the U.S. courts won't do anything about it.
Atkinson has been repeatedly criticized, most notably in a 2008 law journal
article written by Steve Herz, an attorney with Lotus Global Advocacy (who
also happens to be the brother of ERI's Litigation Coordinator, Rick Herz).
Steve has argued that the IOIA should continue to give international
organizations the "same immunity" that foreign states have, and that courts
should apply the FSIA and its exceptions to these organizations.

In the new OSS Nokalva decision, the Third Circuit disagrees with the D.C.
Circuit and basically adopts Steve's view--that the FSIA applies to
international organizations. Among other things, this means that the
"commercial activities exception" applies, and lawsuits can be brought that
are based on an international organization's commercial activity in the United
States. This disagreement may ultimately be resolved by the Supreme Court;
other than the Third Circuit and the D.C. Circuit, none of the other appeals
courts have weighed in, so we don't yet know which interpretation will gain
more support. But the new decision is a welcome step forward in an area
that has generally been characterized by a complete lack of legal
accountability, including a lack of accountability for some of the largest
economic actors on the planet.