International cooperation between countries often leads to the creation of international organisations (IOs) to administer the treaties that states sign and ratify. These IOs, or Intergovernmental Organisations, may operate at the multilateral level, such as the United Nations (UN), or at the regional level, such as the South Asian Association for Regional Cooperation.
While the existence of these IOs is a fact of life, a question of contemporary relevance that has not attracted much attention is whether IOs are subject to the jurisdiction of the domestic courts of the host state where they are based, or whether they enjoy immunity from such jurisdiction. This question is particularly relevant for India as it is home to a number of IOs.
The immunities that different IOs enjoy differ. An IO’s immunity is to be determined through a careful reading of the treaty establishing the IO, the headquarters agreement (an agreement between the IO and the host state), and the domestic legislation, if any, that created the IO. The theoretical basis for an IO’s immunity from the jurisdiction of the host state’s domestic courts is based on the ‘functional necessity’ thesis.
Accordingly, immunity to IOs is crucial to ensure that they can perform their functions smoothly. While this is generally true, the functional necessity thesis, as international lawyers such as Jan Klabbers point out, is not without its problems. For instance, what happens when an IO abuses its powers by acting in an arbitrary or discriminatory fashion? Can the IO still hide under the cloak of immunity in the name of functionality?
Judicial practice of other countries
In numerous countries, a typical case that their national courts have handled is whether they have jurisdiction to hear employment disputes between a staff member and the IO. In all such disputes, IOs have claimed immunity from the court’s jurisdiction. If an IO wishes to claim immunity from domestic courts for employment disputes, it should provide an alternative mechanism to its staff to settle disputes that they may have with the organisation. The International Court of Justice, as early as 1954, in the Effect of Awards Case, upheld the creation of the United Nations Administrative Tribunal, a body created by the UN, for the purpose of providing an orderly judicial mechanism to settle staff disputes.
Traditionally, courts in several jurisdictions have dismissed claims brought by staff members against an IO on the principle of functional immunity. However, more recently, as international lawyer August Reinisch demonstrates, national courts have begun to assess the ‘human rights impact’ of their immunity decisions. The critical question is whether the court’s denial of jurisdiction to hear a claim brought against an IO by a staff member will render the petitioner without remedies. If yes, it would constitute a denial of justice.
Alternative remedy
Arguably, if an IO provides for an alternative dispute settlement mechanism for its staff members, the domestic court should deny jurisdiction, upholding the IO’s immunity. However, a mere theoretical possibility of an alternative dispute settlement is not enough. As the Italian Supreme Court held in Drago vs International Plant Genetic Resources Institute, the alternative remedy should be an independent and impartial judicial remedy to settle staff disputes.
Likewise, a Belgian court in Siedler vs Western European Union abjured the IO’s immunity because the alternative remedy did not promise a fair trial. In Banque africaine de développement vs Degboe, a French court rejected the immunity argument of the because no alternative remedy existed. The bank had created an alternative remedy after the petitioner’s dismissal, which the petitioner could not access.
In short, what courts worldwide are increasingly assessing is not just the availability of the IOs’ alternative dispute settlement but also its adequacy, judged by the principles of natural justice. To better understand this point, let us assume that the domestic legislation creating the IO or the headquarters agreement between the IO and the host state provides for arbitration as an alternative method to resolve employment-related disputes. Will this be sufficient for the IO to claim immunity from the domestic court’s jurisdiction? The answer is no. The theoretical availability of arbitration is a starting point.
Vital questions
The key question is about what steps the IO has taken to effectively implement this alternative remedy. For example, has the IO established a precise mechanism for conducting arbitration to address employment disputes within its rules, regulations and by-laws? Has it appointed a panel of independent arbitrators? Has the IO been affiliated with any arbitral institution and adopted its rules? Moreover, has it expressly waived its immunity regarding the supervisory jurisdiction of domestic courts in the arbitration of employment disputes? If not, arbitration will not be an effective remedy.
In other words, has the IO taken steps to ensure that this alternative remedy provides reasonable and effective access to a dispute settlement mechanism that is fair for the adjudication of employment disputes? If the answer is no, the IO cannot reasonably claim immunity in employment disputes before domestic courts.
In sum, the immunity of IOs should be respected. Nonetheless, immunity should not become a licence for an IO to abuse public power, leading to grave injustice.
Prabhash Ranjan is Professor and Vice Dean (Research), Jindal Global Law School. The views expressed are personal
Published – October 24, 2025 12:08 am IST
