International organizations.(International Finance Corporation)

DISTRICT OF COLUMBIA CIRCUIT FINDS THAT THERE IS NO IMMUNITY FOR INTERNATIONAL FINANCE CORPORATION IN DISPUTE RESULTING FROM CONTRACT NEGOTIATIONS OVER SALE OF INVESTMENT TO THIRD PARTY

The International Finance Corporation (IFC) (Defendant) is an international organization with 178 member states. It primarily invests in private enterprises within developing countries. One of its mandates is to sell its investments to private investors whenever possible. See Article 6, [section] 3 (vi) of the Articles of Agreement of the International Finance Corporation [7 U.S.T. 2197; T.I.A.S. No. 3620; 264 U.N.T.S. 117; in force July 20, 1956].

Salah Osseiran [Plaintiff] is a Lebanese business man who tried to buy the Defendant's 11 % stake in the Middle East Capital Group (an Isle of Guernsey corporation headquartered in Beirut, Lebanon) (MECG). In early October 2005, Plaintiff e-mailed Jan van Bilsen, the Defendant's portfolio manager for the Middle East, offering to purchase the shares.

The parties negotiated by e-mail and telephone for about two months; van Bilsen sent a proposed sales agreement toward the end of November. Plaintiff responded that the agreement was "generally Ok" but proposed some changes. The Defendant did not sign and a few months later tried to sell the shares to a higher bidder.

Plaintiff sued the Defendant in the District of Columbia federal court. The suit claimed (1) that Defendant had breached their contract, (2) that the Defendant was estopped from selling the shares to a third party and (3) that the Defendant breached the parties' confidentiality agreement.

The Defendant moved to dismiss based on its immunity under the International Organizations Immunities Act, 22 U.S.C. [section][section] 288-288f (IOTA). The District Court found that the Defendant had waived its immunity, but dismissed the breach of contract claim for failure to state a claim. The Defendant filed this interlocutory appeal from the denial of its immunity claim. The U.S. Court of Appeals for the District of Columbia Circuit, however, affirms.

The IOIA grants immunity to designated international organizations, similar to the immunity traditionally accorded to foreign governments. International organizations, however, may expressly waive their immunity for purposes of any proceedings or by the terms of a contract. 22 U.S.C. [section] 288a(b). Cases on point have found waivers of immunity where the waiver furthers the organization's ...