United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued September 9, 2008 Decided January 13, 2009
No. 07-7122
SALAH N. OSSEIRAN,
APPELLEE
v.
INTERNATIONAL FINANCE CORPORATION,
APPELLANT
Appeal from the United States District Court
for the District of Columbia
(No. 06cv00336)
Francis A. Vasquez Jr., argued the cause for appellant.
With him on the briefs was Frank Panopoulos.
Michael Joseph argued the cause for appellee. With him
on the brief was Alex Blanton. Joseph O. Click entered an
appearance.
Before: RANDOLPH, ROGERS and TATEL, Circuit Judges.
Opinion for the Court filed by Circuit Judge RANDOLPH.
2
RANDOLPH, Circuit Judge: The International Finance
Corporation is a global institution with 178 member states,
including the United States. It invests in private enterprises in
developing nations. Its charter states that it “shall seek to
revolve its funds by selling its investments to private investors
whenever it can appropriately do so on satisfactory terms.”
Articles of Agreement of the International Finance Corporation,
art. 6, § 3(vi), Dec. 5, 1955, 7 U.S.T. 2197, T.I.A.S. No. 3620
(“IFC Charter”). Salah N. Osseiran, a Lebanese businessman,
sought to purchase one of International Finance’s investments.
When the deal soured, Osseiran sued International Finance. The
question on appeal is whether the International Finance
Corporation is immune from the suit.
In September 2005, Osseiran approached Jan van Bilsen,
International Finance’s portfolio manager for the Middle East.
Osseiran wanted to buy International Finance’s 11 percent stake
in the Middle East Capital Group, a Guernsey corporation
headquartered in Beirut, Lebanon. At the time, Osseiran was a
minority shareholder in the Capital Group. In an October 3,
2005, email to van Bilsen, Osseiran offered to purchase the
shares and requested confidentiality for his offer. The parties
then began negotiating the terms of the proposed sale, primarily
through email and telephone exchanges. Two months of
bargaining culminated in van Bilsen sending Osseiran a draft
sales agreement on November 26. The November agreement
set forth the purchase price, payment terms, and warranties. It
also stated that the parties intended to be contractually bound
only upon execution of the document; van Bilsen noted that
International Finance reserved the right to modify the terms. On
December 1, Osseiran responded that the agreement was
“generally Ok” and proposed some changes. Salah N. Osseiran
Decl., Feb. 26, 2006, Ex. D. At this point the parties’ accounts
diverge. Despite Osseiran’s entreaties, International Finance
declined to sign the draft agreement. On or before February 16,
3
2006, Osseiran learned that International Finance intended to
sell its shares to a higher bidder.
Osseiran’s amended complaint was in three counts.
Count 1 alleged that the November agreement was a binding
contract and that International Finance breached it. Count 2
alleged that International Finance knew Osseiran planned to
acquire a controlling interest in the Middle East Capital Group,
that he bought out other shareholders in reliance on International
Finance’s “promise to sell” him its shares, and that International
Finance is therefore estopped from reneging and selling the
shares to another party. Count 3 alleged breach of
confidentiality on the basis that International Finance agreed to
keep its discussions with Osseiran secret but then divulged them.
International Finance moved to dismiss on the grounds
that it was immune from suit under the International
Organizations Immunities Act, 22 U.S.C. §§ 288–288f, and that
the complaint failed to state a cause of action. The district court
held that International Finance had waived its immunity, but
granted the motion to dismiss the breach of contract count
pursuant to Federal Rule of Civil Procedure 12(b)(6).1 Osseiran
v. Int’l Fin. Corp., 498 F. Supp. 2d 139, 142 (D.D.C. 2007). We
have appellate jurisdiction over International Finance’s
interlocutory appeal from the denial of its immunity claim with
respect to Count 2 (promissory estoppel) and Count 3
1
The statutory basis for the court’s jurisdiction is the
International Finance Corporation Act, 22 U.S.C. § 282f, which
provides that any “action at law or in equity to which the
[International Finance] Corporation shall be a party shall be
deemed to arise under the laws of the United States, and the
district courts of the United States shall have original
jurisdiction of any such action.”
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(confidentiality). See, e.g., Rendall-Speranza v. Nassim, 107
F.3d 913, 916 (D.C. Cir. 1997).
The International Organizations Immunities Act applies
to those international organizations which the President
designates as entitled to the benefits of the Act. Section 2(b)
states that such organizations “shall enjoy the same immunity
from suit and every form of judicial process as is enjoyed by
foreign governments, except to the extent that such
organizations may expressly waive their immunity for the
purpose of any proceedings or by the terms of any contract.” 22
U.S.C. § 288a(b). Among the protected institutions are the
International Monetary Fund, the World Bank, and the World
Trade Organization. 22 U.S.C. § 288 (historical note).
In 1956, President Eisenhower conferred the benefits of
the Act on the International Finance Corporation, subject to any
limitations contained in the corporation’s charter. Exec. Order
No. 10,680, 21 Fed. Reg. 7,647 (Oct. 2, 1956). A section of the
charter entitled “Position of the Corporation with Regard to
Judicial Process” states:
Actions may be brought against the Corporation
only in a court of competent jurisdiction in the
territories of a member in which the Corporation
has an office, has appointed an agent for the
purpose of accepting service or notice of process,
or has issued or guaranteed securities. No actions
shall, however, be brought by members or
persons acting for or deriving claims from
members. The property and assets of the
Corporation shall, wheresoever located and by
whomsoever held, be immune from all forms of
seizure, attachment or execution before the
delivery of final judgment against the
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Corporation.
IFC Charter art. 6, § 3(vi). The provision carries “full force and
effect in the United States” by virtue of the International Finance
Corporation Act, 22 U.S.C. § 282g, which executes United
States membership in the corporation.
The waiver language just quoted is identical to that
appearing in the charter of the International Finance
Corporation’s parent entity, the World Bank, and is common in
the charters of other international financial institutions. See
Restatement (Third) of Foreign Relations Law § 467 reporter’s
note 3 (1987). We first considered a charter with this language
in Lutcher S.A. Celulose e Papel v. Inter-Am. Dev. Bank, 382
F.2d 454, 457 (D.C. Cir. 1967), which held that, through this
language, the defendant bank waived immunity from a debtors’
suit to enforce a loan agreement.
There followed Mendaro v. World Bank, 717 F.2d 610
(D.C. Cir. 1983), and Atkinson v. Inter-Am. Dev. Bank, 156 F.3d
1335 (D.C. Cir. 1998). The question in Mendaro was whether
the World Bank had immunity from a former employee’s sexual
harassment and discrimination suit. Although the waiver
provision contained no exceptions for different types of suit, the
court read a qualifier into it. The court reasoned that an
organization would not give up immunity unless it would gain
a “corresponding benefit which would further the organization’s
goals.” Mendaro, 717 F.2d at 617. A waiver of immunity “with
respect to the World Bank’s commercial transactions with the
outside world” made sense, the court thought, because otherwise
private parties would be hesitant to transact business with the
Bank. Id. at 618. The court thought language in the charter
indicated that the waiver of immunity, like immunity itself, was
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meant to aid the Bank in accomplishing its mission.2 Id. The
court went on to hold that the World Bank had not waived its
immunity from its employee’s suit because the potential benefit
of attracting qualified staff was offset by the Bank’s employee
grievance process and outweighed by the disruption to its labor
practices. Id. at 619 n.56; see also Atkinson, 156 F.3d at 1338.
In Atkinson, the court considered another claim related
to an international organization’s internal affairs. The court held
that the Inter-American Development Bank had not waived its
immunity from an action to garnish one of its employee’s wages
in order to satisfy a divorce judgment. Atkinson, 156 F.3d at
1338–39. Waiver of immunity from such actions would yield
the Bank no conceivable benefit. Id. at 1338. In so holding the
court stated that if waiver of immunity from a “particular type
of suit would further the [organization’s] objectives,” then the
court will find a waiver. Id. (emphasis in original).
Both Mendaro and Atkinson upheld an international
organization’s claim that it had not waived immunity. Both
opinions were consistent with the organization’s apparent view
that invoking immunity was in its best interest. But neither case
considered the organization’s view conclusive. The court held
in both cases that it was for the federal judiciary to decide
whether an international organization’s invocation of immunity
for certain actions would interfere with its mission. One might
2
International Finance’s charter, like the others
considered in this line of cases, prefaces the article on “Status,
Immunities and Privileges” with this statement: “To enable the
Corporation to fulfill the functions with which it is entrusted, the
status, immunities and privileges set forth in this Article shall be
accorded to the Corporation in the territories of each member.”
IFC Charter art. 6, § 1.
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suppose that an organization could mount a case that its
judgment about the need for immunity in certain classes of cases
was deserving of judicial deference. But the International
Finance Corporation has not argued the case along these lines.
Instead, International Finance contends that waiver of
immunity for promissory estoppel and breach of confidentiality
suits would not advance its interests because Osseiran has not
established the essential elements of his claims or, in the
alternative, because his claims are not cognizable under
governing law. In other words, Osseiran will lose on the merits.
The trouble is that in this area, as in others, immunity does not
turn on the validity of the underlying suit. See Kirkham v.
Société Air France, 429 F.3d 288, 293 (D.C. Cir. 2005);
Lutcher, 382 F.2d at 460 (finding that the defendant
international organization waived immunity to the plaintiff’s
suit, then affirming dismissal for failure to state a claim). Both
Mendaro and Atkinson ask whether a waiver of immunity to
allow this type of suit, by this type of plaintiff, would benefit the
organization over the long term. Atkinson, 156 F.3d at 1338;
Mendaro, 717 F.2d at 618. Since the validity of Osseiran’s
claims is not a prerequisite to jurisdiction, we need not
determine whether the law of Guernsey, the site of Middle East
Capital Group’s incorporation, controls, as International Finance
claims.
Both Mendaro and Atkinson stated that immunity from
suits based on “commercial transactions with the outside world”
can hinder an organization’s ability to operate in the
marketplace. Mendaro, 717 F.2d at 618; Atkinson, 156 F.3d at
1338. The thought was that parties may hesitate to do business
with an entity insulated from judicial process; promises founded
on good faith alone are worth less than obligations enforceable
in court. See Atkinson, 156 F.3d at 1338; see also Lutcher, 382
F.2d at 460. International Finance is in the business of selling
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its investments to private parties. IFC Charter art. 3, § 3(vi).
Sales agreements result from negotiations. Osseiran’s
promissory estoppel and confidentiality claims concern
International Finance’s alleged representations during such
negotiations. To follow the Mendaro-Atkinson theory, waiver
of immunity for an action by such a plaintiff, asserting claims
arising out of that category of activity, might help attract
prospective investors by reinforcing expectations of fair play.
Such a “corresponding benefit” would promote International
Finance’s chartered objective of revolving its investments.
As against this potential benefit, International Finance
identifies no unique countervailing costs like those the court
identified in Mendaro. See 717 F.2d at 618 (noting waiver
would “lay the Bank open to disruptive interference with its
employment policies”).3 It follows that the broad language of
the waiver in International Finance’s charter is controlling and
that the corporation does not have immunity from Osseiran’s
claims in counts 2 and 3 of his amended complaint.
Affirmed.
3
The Corporation’s internal policy of requiring formal
execution before assuming binding obligations may go to the
reasonableness of Osseiran’s reliance. But it does not militate
against finding waiver.