Alan Franklin   17 Aug 2018   Diplomacy

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In public international law, the subjects of the law are generally considered to be states and international organisations (IOs); people, corporations and other entities are not bound by, nor entitled to, the benefits of international law. It is often said that international law functions on a different plane than domestic law.

States and IOs are generally seen to have immunity from being sued in any domestic court – a fundamental axiom of international law derived from the foregoing as well as the sovereignty of nations.

The exception to sovereign immunity relates to a state acting in a commercial capacity – for example, if it is buying planes for its commercial airline service which is government-owned; the rationale for this exception is that it would give an unfair advantage to governments when competing with commercial enterprises if the government could not be sued on a procurement contract.

While sovereign immunity is based upon customary international law, a branch of public international law, most countries have domestic laws that prescribe when a state is immune and when it is not – often these domestic laws are inconsistent with international law on the matter. When a domestic court is required to decide on immunity issues, it generally looks primarily (or exclusively) at its own domestic law, to the exclusion of international law concepts.

Recently, the SNC Lavalin case involved individuals who were charged with corruption in Canada; the information that led to the charges had been provided by the World Bank to the Canadian government. The defence lawyers demanded that the World Bank be required to come to court (via subpoena) in Canada to provide testimony on the source of the information. The World Bank pleaded international immunity. The trial judge decided that the World Bank had waived its immunity by bringing the information to Canada. This set off a furore and the Supreme Court of Canada (SCC) was called upon to deal with this issue; the SCC ‘set the record straight’ that the World Bank, an IO, has immunity under Canadian and international law and that merely providing information to Canada did not constitute a waiver of that immunity.

Similar issues were raised when a suit was filed in New York against the United Nations  because people in Haiti died of cholera as a result of the alleged negligence of United Nations staff. The trial court and the court of appeals both dismissed the suit, on the basis of the United Nations’ immunity.

A class action lawsuit was brought against the International Finance Corporation (IFC), a World Bank agency. The IFC is alleged to be liable because it financed a power plant in India which caused severe environmental damage. The case was dismissed by the trial judge and the court of appeal in the US on the basis of immunity, but now the matter is going to be heard by the US Supreme Court.

The US Government filed briefs with the Supreme Court on 31 July, 2018 urging the court to find that immunity should NOT be applicable and that the IFC could be held liable. For a full discussion of the issues, see the following link .

One of the key arguments of the US Government relates to the exemption in sovereign immunity law regarding the commercial actions of governments. The US Government argues that the same should apply to the IFC, since they clearly engaged in commercial relations when they funded a company to build a power plant in India.

The IFC was created by Articles of Agreement and Art. VI sets out the immunities of the IFC. Paragraphs 3 and 4 of Art. 6 seem to allow suits against the IFC and seizure of its assets if a court orders it (Paragraph 4 says that no seizure can result from legislative or executive actions, thereby confirming that court actions can result in the seizure of IFC assets).

The case deals primarily with US legislation on immunity law, particularly the International Organizations Immunities Act of 1945, 22 U.S.C. § 288a(b) (IOIA) as well as the Foreign Sovereign Immunities Act, rather than Customary International Law issues. Under these acts, IOs receive the same privileges, immunities, and exemptions as foreign governments – the US government’s position is that since foreign governments are not entitled to immunity when acting in a commercial manner, the IOs should not be either.

This appears to be the first case of its type. The former cases referred to above did not relate to the UN or the WB acting in a commercial manner, making the immunity issue much clearer. In the latter case against the IFC, the issues are more complex since the IFC provides commercial financing for foreign investment in developing nations.

Alan Franklin obtained an LLB and JD from the University of Toronto and an LLM in international law from the London School of Economics. He is currently living in Vancouver, Canada, teaching courses on international legal business risk to MBA students at Athabasca University, international and constitutional law at Royal Roads University, as well as courses on international law for the University of London international LLM programme. Alan is the founder and chair of an association of former United Nations Ambassadors in the USA.

 

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