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. Inter-American 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.