[00:00:01] Speaker 00:
Page number 20-1792, et al.

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Bouddha Ismail Jam et al.

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A balance.

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Kishubai Abrambai Majalia versus International Finance Corporation.

[00:00:12] Speaker 00:
Mr. Hertz for the balance.

[00:00:13] Speaker 00:
Mr. Green for the appellee.

[00:00:17] Speaker 04:
Council for Appellants, you may proceed.

[00:00:21] Speaker 01:
Thank you, Your Honor, and good morning I'm Richard Lawrence hers for the appellants may please the court.

[00:00:27] Speaker 01:
Under the foreign sovereign immunities act, a sovereign is not immune for its commercial activity in the United States, because the question is whether the sovereign is immune immunity necessarily turns on the sovereign's conduct.

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To determine if the claim is based upon US commercial activity by the sovereign or upon some other conduct by the sovereign, the court identifies the gravamen of the claim against the defendant.

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And that really asks a simple question, which is, why is this plaintiff suing this defendant?

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And here, plaintiffs sued the IFC for its own tortious conduct.

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It provided the Keystone loan that allowed this project to go forward and, among other things,

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it approved all of the design of this plant that harmed the plaintiff.

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And it did so knowing that the design it approved and that the plant going forward would pollute the air, that it would destroy the fisheries, and it would cause a series of other harms to plaintiff's communities that continue to plague plaintiffs to this day.

[00:01:34] Speaker 01:
And ISC committed all of these acts

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at its headquarters in Washington DC, so IFC is not immune.

[00:01:42] Speaker 01:
Now, instead of looking for the gravamen of the claim against IFC, the district court created a new requirement that's at odds with the statute's history, purpose, and precedent, which is that regardless of the gravamen of the claim against the IFC,

[00:02:00] Speaker 01:
The district court held that plaintiffs had to show that IFC's conduct was the last harmful act.

[00:02:08] Speaker 01:
Wasn't the district court just following Sachs?

[00:02:14] Speaker 06:
It seems like the court was just doing what Sachs directs.

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In Sachs,

[00:02:24] Speaker 06:
They claim they didn't use gravamen because, you know, they didn't use it with them, but they claimed that the plaintiffs claimed that the gravamen that there was a sale of the ticket without any warning.

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Here, you claim that it's IFC's decision making.

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And then the court said there is nothing wrong about the sale of the Euro pass standing on them.

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Without the existence of the unsafe boarding conditions in Innsbruck, there would have been nothing to warn Sachs about.

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And it seems that the same thing applies here.

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Without the unsafe construction and operation of the plan in India, there's nothing wrongful about IFC's decision making.

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It just seems like this case is totally controlled by Sachs.

[00:03:12] Speaker 01:
So a couple of points about that, Your Honor.

[00:03:16] Speaker 01:
First of all, Sachs didn't specifically address the question at issue here because the question Sachs- Wait, just respond to my question about the factual similarities here.

[00:03:28] Speaker 06:
I know your argument about the third party, but what about my question about Sachs?

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So what Sachs said about the sale of the ticket was that it didn't cause the conditions on the platform.

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But that's not true of this case, because what IFC did directly caused it.

[00:03:47] Speaker 01:
They approved the design of this plant.

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And the problem with this plant is largely about its design.

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So for example,

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This plant puts out a river of heated water that's destroyed the fishery.

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That isn't because the plant was constructed wrong or operated wrong.

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That's because it was designed that way.

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And IFC approved that design.

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So it would be as if the problem- Where did IFC do that?

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Here in Washington DC.

[00:04:17] Speaker 01:
It would be as if in OBB, so the problem in OBB was that there was a design defect in the platform.

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This would be OBB, this case would be OBB if the railroad approved the design of the platform here.

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The construction cost $4.2 billion.

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Is that right?

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It's something like that.

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And IFC's contribution, financial contribution was four hundred and fifty million.

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Yes, the 10 percent was that was the construction design already in place when IFC came on board?

[00:05:06] Speaker 01:
the construction design isn't in place until IFC approved it because they had final approval authority over the design.

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And so they were.

[00:05:15] Speaker 03:
So none of the other lenders had had approved any kind of say in the design except IFC?

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I don't remember seeing that being alleged.

[00:05:29] Speaker 01:
Well, I can't answer that question because we don't have the other loan agreements.

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We only have IFC's loan agreement.

[00:05:36] Speaker 03:
So you can't make any representation like the one you just made that they had the final approval.

[00:05:41] Speaker 01:
No, well, IFC's authority, the loan, this project doesn't go forward without IFC because IFC provides the Keystone Loan.

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So nobody else comes on board unless IFC comes on board.

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That's pursuant to IFC's own rules.

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And IFC, part of, IFC would not disperse each tranche of the loan, including the first tranche of the loan, until they approve the design.

[00:06:08] Speaker 03:
The loan documents were signed where?

[00:06:11] Speaker 01:
The loan documents were signed in India, but everything IFC did that we allege is torsious from approving the loan, dispersing each individual tranche of the loan,

[00:06:27] Speaker 01:
I'm sorry, approving the design, dispersing each individual transit alone, knowing that the design was faulty and that it either would or as the project went forward was causing harms to plaintiffs, refusing to or declining to enforce each of the provisions of the loan that would have allowed IFC to enforce the standards in the loan that says you can't do this to these communities.

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All of those things were decisions that IFC made and actions IFC took

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here in the United States.

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And I think what OBB was really getting at was that they don't want claims where, you don't want arguments where the plaintiff can recast his claim.

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But if you look at, for example, the First Circuit's opinion in Merlini,

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When you're bringing the claim that you have, you're not recasting your claim.

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And so that concern of OBBs isn't there.

[00:07:35] Speaker 06:
You see, but I'm looking back at the Supreme Court's decision.

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It says, rather than individually analyzing each of the Nelson's, each Nelson's causes of actions, referring back to Nelson, we zeroed in on the core

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of their suit, the Saudi sovereign acts that actually injured them.

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And if you apply that language to this case, it's rather than individually analyzing each of the plaintiff's causes of action, we zero in on the core of their dispute.

[00:08:16] Speaker 06:
The company's acts in India that actually injured them.

[00:08:20] Speaker 01:
That's what

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So the core of this dispute is that IFC committed cautious conduct here in the United States.

[00:08:30] Speaker 01:
So the test that both Sachs and Nelson lay out is that to determine the gravamen of a claim, you look to the elements of the claim under plaintiff's theory of liability.

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And it's a Hornbrook principle of tort law that when you have multiple tort feesers, each

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Each defendant is liable for its own conduct.

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And in particular, where one defendant takes an action that leads to or allows another party.

[00:09:01] Speaker 06:
Yeah, I get that.

[00:09:03] Speaker 06:
But again, the Supreme Court said that in that case, in Sachs, it was a failure to warn, right?

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Right.

[00:09:14] Speaker 06:
Here, it's a failure to supervise.

[00:09:19] Speaker 06:
I mean, I don't see the difference in terms of, I just don't see a material difference between those two and the outcome of the case.

[00:09:27] Speaker 06:
I mean, if Sachs had been properly warned, she might not have bought the ticket.

[00:09:32] Speaker 01:
It's the same argument, isn't it?

[00:09:36] Speaker 01:
No, it's not primarily a failure to supervise.

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It's affirmative conduct and giving the loan and approving the design.

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So like the...

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This project would not have had the problems it had if IFC didn't affirmatively approve the design.

[00:10:00] Speaker 01:
That's different from what happened in Sachs because all they did was the failure to warn did not cause the problem at the platform.

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And that's just not true here.

[00:10:12] Speaker 01:
IFC was part and parcel of the design here that caused the problem in

[00:10:18] Speaker 03:
This sounds like you're arguing a different subject.

[00:10:22] Speaker 03:
There are two separate subjects here.

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One is, what is your lawsuit based on?

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And the other is that assuming there's no sovereign immunity, is IFC liable?

[00:10:34] Speaker 03:
You're arguing about liability, legal liability, rather than the based on analysis the Supreme Court required.

[00:10:45] Speaker 01:
I would say just the opposite, Your Honor.

[00:10:48] Speaker 01:
One of the problems and the district court identified this problem in the first, in its first opinion before it, when it identified the Graveman as being IFC's conduct and then it switched in second.

[00:10:59] Speaker 01:
One of the problems that noted was that

[00:11:01] Speaker 01:
The last harmful act approach that that I have see advocates is actually a limit on liability.

[00:11:09] Speaker 01:
And this because under the last harmful act approach, you can never have a sovereign is always immune and can never be liable for

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aiding and abetting, conspiracy, any joint tort fees or claim where it's not the last act.

[00:11:25] Speaker 01:
And the problem with that is that the Supreme Court in First National City Bank has expressly held that the Foreign Sovereign Immunities Act is not a limit on liability, citing section 1606 in the legislative history.

[00:11:39] Speaker 01:
So when a sovereign is engaged in commercial activity, it has to be treated just like a private party.

[00:11:46] Speaker 01:
And that means it has the same liability rules.

[00:11:49] Speaker 01:
And the problem with their approach is that it is not having the same liability rules.

[00:11:58] Speaker 01:
Defendants would be liable in this case under ordinary tort principles as a joint tort fuser.

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And here, ISC's argument is that they are not because of a different based upon rule than applies in the liability context.

[00:12:13] Speaker 01:
I see your honor that I'm eating into rebuttal time, but I'm happy to answer any other questions the court has now.

[00:12:22] Speaker 05:
All right, why don't we hear from Appellee and then we'll come back to you.

[00:12:26] Speaker 05:
Council for Appellee.

[00:12:30] Speaker 02:
Good morning, Your Honors.

[00:12:31] Speaker 02:
Jeffrey Green from Sidley Austin for Appellee International Finance Corporation with me today are my partner Jenny Clark and Dana Foster and Max Coleman from Whitencase.

[00:12:45] Speaker 02:
I'd like to start where you started Judge Tatel.

[00:12:49] Speaker 02:
with respect to the applicability of Sachs.

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We believe that this case is controlled by Sachs.

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As Your Honor noted, the plaintiff's artful pleading here is to try and move up the causation chain to IFC's decision to make the loan in the first place.

[00:13:07] Speaker 02:
That move, Your Honor, is foreclosed by both Sachs and Nelson.

[00:13:12] Speaker 02:
Both Sachs and Nelson say that butt four causation doesn't do it.

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The test, in fact, is what is the particular conduct that actually injured the plaintiffs?

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And as your honor knows, Chief Justice Roberts went on to say that the essentials, I'm quoting Justice Holmes, the essentials of a personal injury narrative are where the injury actually took place.

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And in this instance, that is Postal Gujarat's construction and operation of the plant in India.

[00:13:51] Speaker 06:
What about the plaintiff's argument that the gravamen of the injury can't be third party conduct?

[00:14:00] Speaker 02:
I think Judge Randolph was on to the flaw there.

[00:14:04] Speaker 02:
is plaintiffs are citing cases and looking to a different analysis.

[00:14:09] Speaker 02:
That analysis is whether there was commercial conduct.

[00:14:12] Speaker 02:
So plaintiffs cases look to foreign acts to determine whether those acts had a direct effect in the United States.

[00:14:22] Speaker 02:
That is a different situation and a different part of the statute that we're concerned about here.

[00:14:26] Speaker 02:
And in those cases, Your Honor, courts have to grapple with who did the act and was the act commercial or not.

[00:14:36] Speaker 02:
So of course, when they look at whether the act was commercial or not, they look at only the acts of the sovereign in those cases.

[00:14:44] Speaker 02:
No one would contend, Your Honor, that if the question were whether IFC's acts were commercial or not, and we submit emphatically that they are not for one of the reasons that Mr. Hurst pointed out, that we would look at IFC's actions.

[00:14:59] Speaker 02:
But that's a threshold question.

[00:15:01] Speaker 02:
The remaining question is the one we're dealing with here, and that is, where is the gravamen?

[00:15:07] Speaker 02:
And the gravamen is the particular conduct that injured the plaintiffs.

[00:15:12] Speaker 05:
Let me just be clear as to your understanding of the law.

[00:15:16] Speaker 05:
So if the engineers are the construction company on the site.

[00:15:26] Speaker 05:
But there is also evidence that the design itself on its face.

[00:15:33] Speaker 05:
called for something that would create damage to the plaintiffs.

[00:15:39] Speaker 05:
In other words, insufficient consideration of irrigation, et cetera, causing pollution of the streams.

[00:15:48] Speaker 05:
And all that is evident on the face of the plans.

[00:15:56] Speaker 05:
And yet the defendant here agrees

[00:16:03] Speaker 05:
to participate by lending money?

[00:16:09] Speaker 05:
Is it that there is no way to get at the defendant's actions or that the plaintiffs have simply pursued the wrong theory of their case?

[00:16:27] Speaker 02:
Respectfully, Your Honor, there would be no way.

[00:16:31] Speaker 02:
IFC has immunity in this, even in that situation, because that's simply dividing claims.

[00:16:38] Speaker 02:
The Supreme Court said, no, and Judge Bates said, and the United States said, no, we're going to look at the case as a whole.

[00:16:47] Speaker 02:
We're gonna look at the essentials of the case.

[00:16:49] Speaker 05:
And the essential- Well, I was trying to pose a hypothetical where there wasn't any question that it was the loan

[00:16:56] Speaker 05:
was in connection with commercial activity.

[00:17:00] Speaker 05:
And the defendant was acting in that respect.

[00:17:03] Speaker 05:
I take your point about immunity, but the question in my mind is have the plaintiffs properly pled?

[00:17:11] Speaker 05:
And I think as my colleagues have pointed out, there are a number of obstacles to be overcome here, but I just wanna be sure I understand what your understanding of the law in this area is.

[00:17:24] Speaker 02:
Well, I mean, your honor points out that if a private actor did that, then a private actor might be subject to sue.

[00:17:33] Speaker 02:
But IFC is not a private actor.

[00:17:36] Speaker 02:
IFC has immunity.

[00:17:38] Speaker 02:
And the Gravaman test does not apply to private actors.

[00:17:41] Speaker 02:
It might apply, something like it might apply.

[00:17:44] Speaker 02:
if we look at whether the forum non-convenience test applies or something like that.

[00:17:51] Speaker 02:
But the Graveman test is unique for IFC.

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Plaintiffs don't deny that the Graveman test applies here.

[00:17:57] Speaker 02:
The question becomes, where were the injuries?

[00:18:00] Speaker 02:
Where did the boy get his fingers pinched?

[00:18:03] Speaker 02:
What are the essentials of the claim?

[00:18:05] Speaker 02:
Here are the essentials of the claim are foreign cube.

[00:18:08] Speaker 02:
These are foreign plaintiffs, these are foreign events, these are alleged foreign injuries.

[00:18:14] Speaker 02:
So even if, Judge Rogers, we moved further down the causal chain with respect to IFC's actions, but for causation is still not enough.

[00:18:26] Speaker 02:
It's a different inquiry.

[00:18:29] Speaker 02:
It's not who caused, it's what happened.

[00:18:34] Speaker 02:
So I also would like to address the narrative here because my colleague, Mr. Herz,

[00:18:41] Speaker 02:
pointed out many times in his presentation that IFC approved the design of the plant.

[00:18:49] Speaker 02:
And there are, as Your Honors pointed out, some serious hurdles there because if you look at the complaint, just even looking at the face of the complaint, paragraph 65, 67, 165, IFC dispersed before those plans were modified.

[00:19:07] Speaker 02:
They were significantly modified by Coastal Gujarat afterwards.

[00:19:12] Speaker 02:
and in ways that cause the plaintiff's injuries here, which leaves the plaintiffs with the complaint, well, you didn't address those modifications.

[00:19:21] Speaker 02:
You didn't do what your own CAO said you should do, which was address those modifications.

[00:19:29] Speaker 02:
But that is just the same as Judge Tatel, you pointed that out.

[00:19:32] Speaker 02:
That is identical to a failure to warrant claim.

[00:19:36] Speaker 02:
And I would

[00:19:37] Speaker 02:
recommend to the court.

[00:19:38] Speaker 02:
And there was a failure to warrant claim in Nelson too.

[00:19:41] Speaker 02:
And Judge Rogers, I would point out that if you look at the facts in Nelson, in Nelson, the Saudi Arabian government advertised in the United States through agents.

[00:19:52] Speaker 02:
They recruited Mr. Nelson in the United States through agents.

[00:19:55] Speaker 02:
They negotiated and signed an agreement in the United States through Nelson.

[00:19:59] Speaker 02:
They orient, or excuse me,

[00:20:01] Speaker 02:
through Saudi Arabia, they oriented Mr. Nelson in the United States, and yet the Supreme Court said, no, no, the Gravaman is in Saudi Arabia because that's where the injuries took place, which is exactly why Sachs so strongly reaffirmed that.

[00:20:18] Speaker 02:
And I would also like to address, Your Honor, with respect to Sachs, the plaintiff's claims that this court should look at

[00:20:28] Speaker 02:
individual claims or should look at individual elements of claims.

[00:20:32] Speaker 02:
A plain reading of sacks and Judge Tatel, you quoted it earlier, says that that language and Nelson and

[00:20:40] Speaker 02:
It's there, but that language in Nelson was overread by the Ninth Circuit.

[00:20:44] Speaker 02:
That's not how you do the test.

[00:20:46] Speaker 02:
You don't go claim to claim.

[00:20:48] Speaker 02:
But even if we went claim to claim here, it would still be the case that IFC's actions, the gravamen of the suit and IFC's actions would have taken place in India.

[00:21:01] Speaker 02:
Why is that?

[00:21:02] Speaker 02:
That's because if

[00:21:05] Speaker 02:
If IFC was to make changes or insist on changes to the design, this is the government's point, Your Honor, was to insist on changes to design and Judge Bates bought it, that would have to be accepted and implemented in India.

[00:21:18] Speaker 02:
If IFC were to insist on compliance with its environment and social standards, that compliance would have had to take place in India.

[00:21:27] Speaker 02:
The plaintiff's third-party issues drop out.

[00:21:30] Speaker 02:
They're talking about the wrong analytical framework.

[00:21:34] Speaker 02:
The plaintiff's claim-by-claim analysis drops out.

[00:21:36] Speaker 02:
You're talking about the wrong analytical framework.

[00:21:39] Speaker 02:
And Sachs tells us what that means.

[00:21:43] Speaker 02:
So we are left, Your Honor, with nothing but a grabberman, nothing but a. All right, anything further?

[00:21:54] Speaker 05:
Thank you, Council.

[00:21:55] Speaker 02:
Can I make one more point, Your Honor, if I may, please?

[00:21:59] Speaker 02:
There's a question about whether what IFC does is commercial or not.

[00:22:05] Speaker 02:
And I want to emphasize something that Mr. Hurst said earlier, which Your Honor can find at page 693 in the JA.

[00:22:17] Speaker 02:
And that is that IFC does not lend or invest

[00:22:23] Speaker 02:
unless there is insufficient private capital available on reasonable terms.

[00:22:30] Speaker 02:
So what does that mean?

[00:22:31] Speaker 02:
That means that IFC does things that commercial banks don't do.

[00:22:37] Speaker 02:
That's the opposite of acting like a commercial party in this instance.

[00:22:42] Speaker 02:
And as Judge Bates pointed out, there is certainly the possibility that a public organ could use a private tool like a loan agreement or a contract in order to fulfill its public purpose.

[00:23:02] Speaker 02:
And we submit that that's what IFC does day in and day out under the immunities that are conferred by the Iowa and by IFC's articles.

[00:23:16] Speaker 05:
All right.

[00:23:17] Speaker 04:
My colleagues have no further questions.

[00:23:19] Speaker 04:
Thank you.

[00:23:21] Speaker 01:
Thank you.

[00:23:23] Speaker 04:
Council for appellant.

[00:23:25] Speaker 01:
Thank you, your honor.

[00:23:26] Speaker 01:
If I heard my friend on the other side correctly, he conceded as he must that a private actor might be liable in these circumstances.

[00:23:34] Speaker 01:
And that's exactly our point.

[00:23:36] Speaker 01:
The court can't impose a different liability.

[00:23:42] Speaker 03:
That can't be a test because then Nelson is wrongly decided.

[00:23:47] Speaker 03:
If somebody tortures somebody and holds them, kidnaps them, they'd be liable.

[00:23:56] Speaker 03:
But that doesn't mean that the sovereign immunity is not there.

[00:24:02] Speaker 03:
Let me put it this way, you don't need sovereign immunity if you're not liable.

[00:24:07] Speaker 03:
You only need it if you're liable.

[00:24:12] Speaker 01:
The issue would be what conduct is the Graveman and their Graveman test.

[00:24:17] Speaker 01:
So the problem in Nelson is that the Graveman wasn't commercial conduct, but their Graveman test cuts off liability.

[00:24:24] Speaker 01:
It says that you can never have liability unless you commit the last harmful act.

[00:24:30] Speaker 01:
It wasn't commercial.

[00:24:33] Speaker 03:
You can't be serious about that.

[00:24:35] Speaker 03:
I mean, recruiting and hiring is not a commercial activity.

[00:24:39] Speaker 01:
That is a commercial activity but Saudi Arabia did.

[00:24:44] Speaker 01:
No, what the Supreme Court said in Nelson is that the recruiting and hiring wasn't the basis of the claim the torture was, but the point I'm making is that

[00:24:55] Speaker 01:
when you figure out what the gravamen of the claim is, not when you figure out its character, but when you figure out what the gravamen is, you can't adopt a rule that cuts off liability because the Supreme Court specifically said in First National City Bank that the act was not intended to affect the substantive law determining the liability of a foreign state.

[00:25:15] Speaker 01:
And their last harmful act rule is a liability rule.

[00:25:19] Speaker 01:
It says you can never have

[00:25:21] Speaker 01:
aiding and abetting and various other kinds of liability.

[00:25:24] Speaker 01:
And that's inconsistent.

[00:25:25] Speaker 01:
Their position is inconsistent with this court's opinion in trans America, where this court held that there were two government entities.

[00:25:36] Speaker 01:
One was liable for aiding and abetting the other.

[00:25:39] Speaker 01:
And one was not immune for aiding and abetting the other.

[00:25:42] Speaker 01:
And if you take their approach, the embassy in that case would have been immune because all it did was aid and abet the other entities torts.

[00:25:51] Speaker 01:
There's no way to reconcile their position with trans America.

[00:25:57] Speaker 06:
Would you, Mr. Harris, would you just quickly respond to Mr. Green's argument about your third party argument?

[00:26:07] Speaker 01:
I'm sorry, Your Honor.

[00:26:09] Speaker 06:
Would you respond to Mr. Green's response to your third party argument?

[00:26:15] Speaker 01:
Yeah, I mean, I think wherever you look, whether you look to this court's precedent in cases like trans America, I think if you look to the text, it's very clear that what the IFC, I'm sorry, that what Congress was trying to do was establish a geographic limit.

[00:26:30] Speaker 01:
Once a party is engaged in commercial activity, it's not immune for its conduct.

[00:26:36] Speaker 01:
And so then the question becomes, where can you sue it?

[00:26:39] Speaker 01:
It's very clear that what Congress intended was this to be something akin to a long-arm statute.

[00:26:48] Speaker 01:
And personal jurisdiction never looks to a third party's acts.

[00:26:54] Speaker 01:
Eight circuits, including this one, have either

[00:26:58] Speaker 01:
indicated or held in this court held that you look to the acts of the of the party itself and once you once you do that as all weren't those all pre sex cases, they were not all pre sex cases I mean.

[00:27:13] Speaker 01:
In, for example, NACA this this court looked to Nigeria's acts, not to the acts of in that case it was DOJ which committed the last harmful act.

[00:27:26] Speaker 01:
And in fact, so that approach was was.

[00:27:29] Speaker 01:
was the Fifth Circuit adopted that approach of looking to the Sovereign Defendants Act in Kalejo.

[00:27:35] Speaker 01:
And the Supreme Court in both OBB and Nelson specifically relied on Kalejo for its test.

[00:27:46] Speaker 01:
Their position is that when it adopted the same test in Kalejo, it actually overturned Kalejo.

[00:27:52] Speaker 01:
And that just doesn't make a whole lot of sense.

[00:27:55] Speaker 01:
OK, thank you.

[00:27:57] Speaker 01:
Thank you.

[00:27:58] Speaker 01:
And if I could just close on one final point.

[00:28:02] Speaker 01:
If we were at the merit stage and we said IFC is liable because coastal Gujarat acted torsively, the court and IFC would rightly object that we have to prove that IFC acted torsively.

[00:28:16] Speaker 01:
And that's exactly our point.

[00:28:18] Speaker 01:
This is a case about IFC's negligence.

[00:28:21] Speaker 01:
It's what IFC did wrong.

[00:28:22] Speaker 01:
That's where the court has to look in order to determine what the basis of the claim is.

[00:28:28] Speaker 01:
And the basis of the claim is that IFC committed a series of tortious acts here in the United States.

[00:28:35] Speaker 05:
Thank you.

[00:28:36] Speaker 05:
We'll take the case under advisement.