When states combine to form an organization, it has the power to perform certain functions which have legal consequences. In the course of performing these functions an inter-governmental organization may incur liabilities to third parties. These third parties may be states, other organizations, individuals or legal persons. The states may be member states of the organization itself or other states, while individuals and legal persons may be nationals of member states or not. The liabilities may arise from transactions, such as international agreements between states and the organization, which take place at an international level and are governed by international law, or from transactions which take place at a non-international level and are governed by national law or transnational law, for example, whether they are between the organization and states, individuals or legal persons. Such liabilities may be contractual, quasi-contractual or delictual.

Whether the transactions are on the international plane or not, the question may be asked how far the member states of the organization are responsible for the liabilities of the organization and in what circumstances and to what extent the third party may have recourse to the member states for the purpose of having the liability discharged. There is a further issue, that of the liability of member states to the organization, which has been discussed in connection with the financing of international organizations in Chapter 11. The first question is of considerable importance and will be discussed here.