International Finance Loses Bid for Immunity

(CN) - The D.C. Circuit revived a Lebanese businessman's contract claim against the International Finance Corporation, saying the global institution's charter limited its immunity.

International Finance, which invests in private ventures in developing countries, has 178 member states, including the United States.

In 2005, it allegedly breached a contract to sell its 11 percent stake in the Middle East Capital Group to businessman Salah N. Osseiran. Osseiran claimed the company reneged on a sales agreement and sold its interest to a higher bidder.

He sued the company for breach of contract, promissory estoppel and breach of confidentiality.

International Finance asserted immunity under the International Organizations Immunities Act, which grants certain international organizations "the same immunity from suit and every form of judicial process as is enjoyed by foreign governments," except when the organizations intentionally waive their immunity. The president decides which global organizations are covered by the Act. Protected institutions include the International Monetary Fund, the World Bank and the World Trade Organization.

In 1965, President Eisenhower conferred the Act's benefits on International Finance, subject to the limits of its charter.

The charter allows litigation "only in a court of competent jurisdiction in the territories of a member in which the Corporation has an office."

Because the company has an office in the United States, the court concluded, International Finance does not have immunity from the plaintiff's promissory estoppel and confidentiality claims.

The lower court had dismissed the contract claim on procedural grounds.

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