This is an appeal from a District Court judgment dismissing an action by the appellants1 claiming they had been improperly discharged by the Organization of American States (OAS). The district court held that OAS was absolutely immune from suit.2 We affirm on the ground that, even assuming for discussion the applicability of the lesser, "restrictive" immunity doctrine, which permits a lawsuit based on "commercial" activity to be maintained against a sovereign without its consent, this case does not present such "commercial" activity.

The plaintiffs-appellants are seven former staff members of the General Secretariat of OAS. Before their termination, they had been employed at the permanent headquarters of the organization in Washington, D. C., for periods ranging from six to twenty-four years. They are all United States citizens or foreign nationals admitted to permanent residency in the United States.

The appellants were dismissed from the Secretariat on August 31, 1976, due to a reduction in force mandated by the OAS General Assembly. At various times between October 31 and November 8, 1976, they filed complaints with the Administrative Tribunal of the OAS, the internal court created to resolve personnel disputes. On June 1, 1977, the Tribunal held that the discharges had been improper and that the appellants should be reinstated at the grades they held when they were separated from service. In accordance with its governing statute, the Tribunal also fixed an indemnity to be paid to each appellant should the Secretary General choose to exercise the option of refusing to reinstate them. Subsequently, the Secretary General denied reinstatement, and each appellant received the indicated indemnity.3

On November 16, 1977, the appellants brought this action in the district court, alleging breach of contract and seeking damages totalling three million dollars. The OAS moved to quash service and dismiss the complaint, asserting that the district court lacked subject matter jurisdiction and that the OAS is immune from service of process; but the district court denied the motion in an order dated January 25, 1978.4 On February 28, the OAS filed a request for certification under 28 U.S.C. § 1292(b) so as to take an interlocutory appeal of the January order to this court. In a final order dated March 28, 1978, the district court vacated its order of January 25 and dismissed the lawsuit.5 The March 28 order stated in pertinent part:

On January 25, 1978, this Court held that the express language of 22 U.S.C. § 288a(b) and the statutory purposes underlying the International Organizations Immunities Act of 1945 bring international organizations within the terms of the Foreign Sovereign Immunities Act of 1976, and that pursuant to 28 U.S.C. § 1330 this Court had jurisdiction over the parties and controversy involved in the case. Upon careful review of that decision, the Court finds that it did not properly weight the facts that international organizations, and particularly the Organization of American States, are creatures of treaty and by virtue of treaty stand in a different position with respect to the issue of immunity than sovereign nations. The Court is persuaded that international organizations are immune from every form of legal process except insofar as that immunity is expressly waived by treaty or expressly limited by statute. The Court is further persuaded that this Court has jurisdiction over lawsuits involving international organizations only insofar as such jurisdiction is expressly provided for by statute.

The Foreign Sovereign Immunities Act of 1976 makes no mention of international organizations. The jurisdictional grant of 28 U.S.C. § 1330 refers only to foreign states. Nothing in the International Organizations Immunities Act of 1945 provides for jurisdiction in the district courts over civil actions against international organizations.

On April 19, 1978, appellants filed their notice of appeal from this ruling.

In its final order, the district court concluded that it lacked subject matter jurisdiction,6 and the OAS advances that position on appeal. Appellants and the district court in its January 25 order rely upon a conjunctive reading of the International Organizations Immunity Act (IOIA) of 1945, 22 U.S.C. § 288a(b)7 (1979), and the Foreign Sovereign Immunities Act (FSIA) of 1976, 28 U.S.C. § 1330 (1979),8 to establish jurisdiction. The OAS counters that § 288a(b) confers immunity, not jurisdiction, and that § 1330 establishes jurisdiction over suits against foreign states, not international organizations.

The United Nations (U.N.), appearing amicus curiae, offers a different approach to the question of jurisdiction. It contends that jurisdiction over suits involving international organizations exists under 28 U.S.C. § 1331(a).9 In support of this contention, amicus cited International Refugee Organization v. Republic Steamship Co., 189 F.2d 858, 861 (4th Cir. 1951), which held that "an international organization created by treaties to which the United States is a party may invoke (federal question) jurisdiction because it is created by a treaty of the United States." That case also found an alternate basis for federal court jurisdiction over suits brought by international organizations in the provisions of 28 U.S.C. § 288a(a) that confer capacity to sue upon international organizations. Id. at 860. Counsel for the U.N. reasons from this alternative holding that, if international organizations may institute suits in a federal court, they should be permitted to defend them there; thus, he argues that § 1331 should be construed to confer federal jurisdiction over such suits.

Because clear and adequate non-judicial grounds for the disposal of this case exist, we need not and do not decide the difficult jurisdictional issues it presents.

B. The Immunity of International Organizations

The International Organizations Immunities Act of 1945, 22 U.S.C. § 288a(b) (1979), grants to international organizations which are designated by the President10 "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."11 As of 1945, the statute granted absolute immunity to international organizations, for that was the immunity then enjoyed by foreign governments.

The Foreign Sovereign Immunities Act of 1976, 28 U.S.C. § 1602 et seq. (1979), codified what, in the period between 1946 and 1976,12 had come to be the immunity enjoyed by sovereign states restrictive immunity. The central feature of restrictive immunity is the distinction between the governmental or sovereign activities of a state (acts jure imperii ) and its commercial activities (acts jure gestionis ). Foreign states may not be found liable for their governmental activities by American courts; but they enjoy no immunity from liability for their commercial activities.

Appellants and the United States as amicus curiae submit the following syllogism: the IOIA conferred on international organizations the same immunity enjoyed by foreign governments; the FSIA indicates that foreign governments now enjoy only restrictive immunity; therefore, international organizations enjoy only restrictive immunity. They are supported by the general doctrine that ordinarily, "(a) statute which refers to the law of a subject generally adopts the law on the subject as of the time the law was invoked . . . includ(ing) all the amendments and modifications of the law subsequent to the time the reference statute was enacted."13

The OAS and several other international organizations as amici curiae counter that Congress granted international organizations absolute immunity in the IOIA, and it has never modified that grant. They rely on three implications of a legislative intent not to apply to international organizations the post World War II evolutions in the doctrine of sovereign immunity.

First, the FSIA is generally silent about international organizations. No reference to such organizations is made in the elaborate definition of "state" in § 1603,14 and only § 161115 even alludes to their existence. True, § 1611, dealing as it does with the attachment of property belonging to international organizations, presupposes a successful action against an international organization. However, that could follow a waiver of immunity. Alternatively, § 1611 would have application in case of an attempt to execute a judgment against a foreign state by attaching funds of that foreign state held by an international organization.16

Second, by its own terms the IOIA provides for the modification, where appropriate, of the immunity enjoyed by one or more international organizations.

Under the statute, the President can withdraw or restrict the immunity and privileges thereby conferred. Specifically, it provides:

The president (is) authorized, in the light of the functions performed by any such international organization, by appropriate executive order to withhold or withdraw from any such organization or its officers or employees any of the privileges, exemptions, and immunities provided for in this title . . . or to condition or limit the enjoyment by any such organization or its officers or employees of any such privilege, exemption, or immunity.17

The Senate Report on the IOIA stated: "This provision will permit the adjustment or limitation of the privileges in the event that any international organization should engage for example, in activities of a commercial nature."18 And, in floor debate on the legislation, its supporters pointed again to this provision as a limitation on commercial abuses by an international organization.19 Hence this provision may reveal that Congress intended to grant absolute immunity to international organizations giving to the President the authority to relax that immunity, including removal or restriction of immunity in cases involving the commercial activities of international organizations.

Finally, Congress may have concluded that the policies and considerations that led to the development of the restrictive immunity concept for foreign nations do not apply to international organizations like the OAS.20

We need not decide this difficult question of statutory construction. On either theory of immunity absolute or restrictive an immunity exists sufficient to shield the organization from lawsuit on the basis of acts involved here.

C. The "Commercial" Activity Concept in the Restrictive Immunity Doctrine

Even under the restrictive immunity doctrine, there is immunity from lawsuits based on governmental or sovereign activities the jure imperii as distinct from commercial activities. We discuss the narrower standard of restrictive immunity not because it is necessarily the governing principle, but because we discern that an organization conducting the activities at issue in this case is shielded even under the restrictive immunity formula, and a fortiori on the absolute immunity theory.

Section 1605 of the FSIA provides that foreign states shall not be immune from the jurisdiction of American courts in any case based upon their commercial activity in the United States, with the commercial character of an activity determined by reference to its "nature" rather than to its "purpose."21 The conceptual difficulties involved in differentiating jure questionis from jure imperii have led some commentators to declare the distinction unworkable.22 The restrictive immunity doctrine is designed to accommodate the legal interests of citizens doing business with foreign governments on the one hand, with the interests of foreign states in avoiding the embarrassment of defending the propriety of political acts before a foreign court.

In our view, the employment by a foreign state or international organization of internal administrative personnel civil servants is not properly characterized as "doing business." That view is supported by the legislative history of the FSIA, and the definition of "commercial activity" in § 1603. The House Report commented:

(d) Commercial activity. Paragraph (c) of section 1603 defines the term "commercial activity" as including a broad spectrum of endeavor, from an individual commercial transaction or act to a regular course of commercial conduct. A "regular course of commercial conduct" includes the carrying on of a commercial enterprise such as a mineral extraction company, an airline or a state trading corporation. Certainly, if an activity is customarily carried on for profit, its commercial nature could readily be assumed. At the other end of the spectrum, a single contract, if of the same character as a contract which might be made by a private person, could constitute a "particular transaction or act."

As the definition indicates, the fact that goods or services to be procured through a contract are to be used for a public purpose is irrelevant; it is the essentially commercial nature of an activity or transaction that is critical. Thus, a contract by a foreign governmental to buy provisions or equipment for its armed forces or to construct a government building constitutes a commercial activity. The same would be true of a contract to make repairs on an embassy building. Such contracts should be considered to be commercial contracts, even if their ultimate object is to further a public function.

By contrast, a foreign state's mere participation in a foreign assistance program administered by the Agency for International Development (AID) is an activity whose essential nature is public or governmental, and it would not itself constitute a commercial activity. By the same token, a foreign state's activities in and "contacts" with the United States resulting from or necessitated by participation in such a program would not in themselves constitute a sufficient commercial nexus with the United States so as to give rise to jurisdiction (see sec. 1330) or to assets which could be subjected to attachment or execution with respect to unrelated commercial transactions (see sec. 1610(b)). However, a transaction to obtain goods or services from private parties would not lose its otherwise commercial character because it was entered into in connection with an AID program. Also public or governmental and not commercial in nature, would be the employment of diplomatic, civil service, or military personnel, but not the employment of American citizens or third country nationals by the foreign state in the United States.23

This report clearly marks employment of civil servants as noncommercial for purposes of restrictive immunity. The Committee Reports establish an exception from the general rule in the case of employment of American citizens or third country nationals by foreign states. The exception leaves foreign states free to conduct "governmental" matters through their own citizens. A comparable exception is not applicable to international organizations, because their civil servants are inevitably drawn from either American citizens or "third" country nations. In the case of international organizations, such an exception would swallow up the rule of immunity for civil service employment disputes.

The United States has accepted without qualification the principles that international organizations must be free to perform their functions and that no member state may take action to hinder the organization.24 The unique nature of the international civil service is relevant. International officials should be as free as possible, within the mandate granted by the member states, to perform their duties free from the peculiarities of national politics. The OAS charter, for example, imposes constraints on the organization's employment practices.25 Such constraints may not coincide with the employment policies pursued by its various member states.26 It would seem singularly inappropriate for the international organization to bind itself to the employment law of any particular member, and we have no reason to think that either the President or Congress intended this result. An attempt by the courts of one nation to adjudicate the personnel claims of international civil servants would entangle those courts in the internal administration of those organizations. Denial of immunity opens the door to divided decisions of the courts of different member states passing judgment on the rules, regulations, and decisions of the international bodies. Undercutting uniformity in the application of staff rules or regulations would undermine the ability of the organization to function effectively.27

We hold that the relationship of an international organization with its internal administrative staff is noncommercial, and, absent waiver, activities defining or arising out of that relationship may not be the basis of an action against the organization regardless of whether international organizations enjoy absolute or restrictive immunity.

The appellants were staff members of the General Secretariat of the OAS. Their appointments, terms of employment, salaries and allowances, and the termination of employment were governed by detailed "Staff Rules of the General Secretariat" promulgated by the OAS. The Staff Rules further establish an elaborate grievance procedure within the OAS, with ultimate appeal to the Administrative Tribunal of the OAS.

The Tribunal is competent to determine the lawfulness of an employee's termination of employment. If an employee has been wrongfully discharged, the Tribunal may order reinstatement. If reinstatement is ordered, the Tribunal may also establish an indemnity to be paid to the employee in the event the Secretary General exercises his authority to indemnify the employee rather than effect the reinstatement.

The employment disputes between the appellants and OAS were disputes concerning the internal administrative staff of the Organization. The internal administration of the OAS is a non-commercial activity shielded by the doctrine of immunity. There was no waiver, and accordingly the appellant's action had to be dismissed.

Affirmed.