Intl. Finance Corp. lawsuit (re financing of coal-fired plant in India)

Tata power. Credit: Earth Rights InternationalPour la version française de ce profil, cliquez ici.

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In November 2015, Indian fishermen and farmers filed a lawsuit against the International Finance Corporation (IFC) in US federal court over environmental damage from the Tata Mundra plant in Gujarat, India, a power plant that the IFC financed.  In March 2016, a judge ruled that the IFC could not be sued in this case. 

In August 2016, affected communities and farmers filed an appeal arguing that, under recent US Supreme Court decisions, the IFC is not entitled to absolute immunity and should be subject to suit for damage caused by the power plant. On 23 June 2017, a US court of appeals ruled that the IFC is entitled to “absolute immunity” and cannot be sued by the communities harmed by IFC projects.  In July 2017, the affected communities asked a court to review the "absolute immunity" doctrine. On 26 September 2017, a US Court of Appeals ruled that it would not reconsider the immunity rule. On 22 January 2018, the plaintiffs appealed to the US Supreme Court that agreed to hear the case, thereby accepting to consider the question of whether or not international organizations such as the World Bank are immune from being sued. On 31 July 2018, the US Government, as well as nine NGOs and experts, filed amicus briefs to the Supreme Court in support of the plaintiffs, arguing that international organizations like the World Bank Group should be subject to lawsuits for damages arising out of their commercial activities.

On 31 October 2018, the US Supreme Court heard Indian villagers' appeal challenging the immunity of the IFC under US law. On 27 February 2019, the US Supreme Court ruled that the IFC is not immune from proceedings in US courts and can in fact be sued when it is acting as a private player in the market. The case will return to the lower courts.

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Article
18 March 2019

Commentary: Consequences of US Supreme Court ruling on lack of immunity of Intl. Finance Corp. for accountability mechanisms

Author: Kristina Daugirdas, Just Security (USA)

"What Comes Next: After Supreme Court Reduced Obstacles to Suing International Organizations", 13 Mar 2019

Suing international organizations just got a little bit easier, as a result of a 7-1 U.S. Supreme Court decision issued last week in Jam v. International Finance Corporation. The case concerned the scope of immunity provided to these organizations — including the World Bank, the World Health Organization, and dozens of others — by the International Organizations Immunities Act (IOIA). The result is a significant, but still incomplete, victory for the plaintiffs.

The D.C. Circuit had long interpreted the statute to provide absolute immunity to international organizations, at least in the absence of a waiver or some other limitation. The Supreme Court held that the immunity conferred by the IOIA is considerably narrower — specifically, that it tracks the immunity that foreign governments enjoy from suit. But how much will this ruling open the courthouse doors to those seeking to hold international organizations accountable?...

...[S]ubjecting international organizations to suit in national courts involves serious problems and risks as well...

The best solution by far would be to strengthen the international accountability mechanisms created to provide recourse for communities harmed by projects involving international organizations...

Along similar lines, Jam may encourage negotiations between international organizations and the U.S. government that would lead to the development or reinforcement of such accountability mechanisms....

But Jam also might pull in the opposite direction and discourage the further development or retention of accountability mechanisms...

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Article
27 February 2019

Historic Supreme Court Win: World Bank Group Is Not Above The Law

Author: EarthRights International

In a historic 7-1 decision, the U.S. Supreme Court decided today in Jam v. International Finance Corporation (IFC) that international organizations like the World Bank Group can be sued in U.S. courts.

The Court’s decision marks a defining moment for the IFC – the arm of the World Bank Group that lends to the private sector. For years, the IFC has operated as if it were “above the law,” at times pursuing reckless lending projects that inflicted serious human rights abuses on local communities, and then leaving the communities to fend for themselves.

International organizations like the IFC have long claimed they are entitled to “absolute” immunity, even as they engage in commercial activities, like the coal-fired power plant at the heart of this case. Because the relevant statute only gives the IFC the same immunity as foreign governments, and foreign governments do not have absolute immunity in U.S. courts when they engage in commercial activities, the Supreme Court rejected this position: “The International Finance Corporation is therefore not absolutely immune from suit.”...

Now that the Supreme Court has established that the World Bank Group can be sued, the case will return to the lower courts for further litigation...

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Lawsuit
27 February 2019

Jam et al. v. International Finance corp.

Author: Supreme Court of the United States

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Article
27 February 2019

Justices hold that international organizations do not have near-complete immunity

Author: Amy Howe, SCOTUSblog

The Supreme Court today ruled that, just like foreign countries, international organizations such as the World Bank can be sued in U.S. courts when they are acting as private players in the market….

In 2008, the [International Finance Corporation] loaned $450 million to help finance a coal-fired power plant on the western coast of India…but residents who live near the plant say that it was an environmental disaster and…sued the IFC in a federal court in Washington, D.C….The question before the Supreme Court was…whether…the [IFC] is immune from being sued in U.S. courts…The Supreme Court agreed with the residents, reversing a decision for the IFC by the U.S. Court of Appeals for the District of Columbia Circuit…

The court rejected the IFC’s argument that the [1945 International Organizations Immunities Act] should “not be read to tether international organization immunity to changing foreign sovereign immunity” because the two kinds of immunity serve different purposes: Immunity for foreign governments has its roots in mutual respect and reciprocity among countries, while immunity for international organizations is intended to allow them to operate without interference from the courts of member countries…

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Article
27 February 2019

Justices Nix Immunity for Financier of Indian Power Plant

Author: Barbara Leonard, Courthouse News Service

The U.S. Supreme Court revived a lawsuit [on 27 February 2019] by a group of fisherman in Gujarat, India, who say a coal-fired power plant is threatening their way of life…The lead plaintiff in the case…says that opening of the $4.14 billion Tata Mundra Plant in 2013 has degraded local air quality and severely damaged the marine ecosystem…[Plaintiff] directed his lawsuit…not at Tata Power, the Indian parent company behind the plant, but at International Finance Corp., the private-lending arm of the World Bank Group, which provided $450 million to the project…

The [US Supreme Court] ruling sparked applause from EarthRights International, which represents the villagers alongside attorneys at Stanford Law School’s Supreme Court Clinic. “For years, the IFC has operated as if it were ‘above the law,’ at times pursuing reckless lending projects that inflicted serious human rights abuses on local communities, and then leaving the communities to fend for themselves,” the group said in a statement…Attorneys for the IFC have not returned an email seeking comment…

EarthRights International notes that it has another case pending against the IFC in U.S. District Court for the state of Delaware. Juana Doe et al v. IFC involves IFC projects in Honduras that have been linked to murders, torture and other violence by paramilitary groups and death squads…

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Article
27 February 2019

U.S. Supreme Court Rules Against World Bank Arm on Immunity

Author: Greg Stohr, Bloomberg

The U.S. Supreme Court opened some American-based international organizations to lawsuits, ruling that a World Bank affiliate must defend against allegations it is responsible for environmental damage caused by a power plant in India…The decision could mean new legal liability for the IFC and other multilateral development banks. The ruling doesn’t affect the International Monetary Fund or the United Nations itself, both of which have complete immunity from suit under the terms of their charters.

A 1945 federal law says international organizations are entitled to the "same immunity" as foreign countries. The central question for the court was how that provision was affected by a 1976 law that said foreign governments don’t get immunity when they are involved in commercial dealings. The 1976 measure didn’t mention international organizations. 

Writing for the court, Chief Justice John Roberts said the 1976 law also changed the immunity possessed by international organizations. The 1945 law "should therefore be understood to link the law of international organization immunity to the law of foreign sovereign immunity, so that the one develops in tandem with the other," Roberts wrote. He said the standard set by the 1976 law "hardly means unlimited exposure to suit for international organizations."

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Article
27 February 2019

World Bank Group Absolute Immunity Ends in Landmark U.S. Supreme Court Decision

Author: Accountability Counsel

Today, the United States Supreme Court issued its decision in Jam et al. v. International Finance Corp., a landmark case challenging the World Bank Group’s claim to absolute immunity in a lawsuit brought by fishing communities in India...In a 7-1 ruling, the justices have ended the International Finance Corporation’s (IFC) absolute immunity from lawsuits in U.S. courts. The immunity upset at the IFC, the private sector arm of the World Bank Group, will have wide-ranging and global implications.

As an organization dedicated to supporting communities to defend their rights when they are harmed by institutions like the World Bank, Accountability Counsel welcomes this decision to open the door for legal liability...

“There is no question that international institutions will now need to strengthen their accountability frameworks as responsible and legally liable actors in the global economy,” said Kindra Mohr, Accountability Counsel’s Policy Director...

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Article
7 November 2018

Commentary: US Court ruling on Intl. Finance Corp. immunity from lawsuits could have limited impact even if decided in favour of the plaintiffs

Author: Sasha Chavkin, International Consortium of Investigative Journalists

"Indian fishing community tests World Bank immunity before US Supreme Court", 1 Nov 2018

[Last week,] the U.S. Supreme Court heard arguments...on whether the World Bank and other international organizations enjoy absolute immunity from U.S. lawsuits...

The legal case hinges largely on a 1945 law, passed to apply to the United Nations and other international bodies, which granted these organizations “the same immunity from suit” as foreign governments...The plaintiffs argued that loans from the IFC should be considered as commercial activities that fall outside the protection of sovereign immunity...

The case centered on the...Tata Mundra power plant, built by the...the Tata Group and backed by $450 million in loans from the IFC...The IFC refused to consider them as “project-affected people” entitled under its rules to be consulted about the project and compensated for any damages

Ultimately, even if the Supreme Court decides in favor of the fishing community, it could have limited impact.  The high court’s ruling will determine only if the lawsuit may proceed in U.S. lower courts, and, if it does, those courts could decide that the plaintiffs have not proven their claims or that the IFC’s actions in the Tata Mundra case are protected even if its immunity is not absolute...

 

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Article
1 November 2018

US Supreme Court likely to back Intl. Finance Corp. in case challenging its immunity from lawsuits

Author: Lawrence Hurley, Reuters

"U.S. top court mulls pollution dispute over power plant in India", 31 Oct 2018

The U.S. Supreme Court on Wednesday appeared unlikely to revive a lawsuit by villagers in India seeking to hold a Washington-based international financial institution responsible for environmental damage they blame on a power plant it financed.  The justices heard an hour of arguments in an appeal by the villagers of a lower court ruling that the International Finance Corp, part of the World Bank Group, was immune from such lawsuits under U.S. law.  Several justices expressed skepticism toward the villagers’ legal argument, signaling the court was likely to back the IFC.  A ruling is due by the end of June...

...The IFC expressed concern that a ruling against the organization could invite similar lawsuits targeting it and other international development banks.  Justice Stephen Breyer appeared to sympathize...Justice Elena Kagan said the IFC’s interpretation of the scope of immunity appears to “make a lot more sense.”...President Donald Trump’s administration backed the plaintiffs, saying international organizations should not be given anything more than the limited immunity foreign countries are accorded...One of the nine justices did not participate in the case...

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Article
30 October 2018

US Supreme Court to consider immunity of Intl. Finance Corporation from lawsuit over negative impact of coal-fired plant in India

Author: Kirk Herbertson, EarthRights International

"Supreme Court Preview: Is the World Bank Group Above the Law?", 29 Oct 2018

...The case, Budha Ismail Jam et al. v. International Finance Corporation (IFC), will be argued on Wednesday [31 October] before the U.S. Supreme Court...to decide if international organizations such as the IFC are absolutely immune from lawsuits in U.S. courts...

The petitioners are members of a fishing and farming community in India, represented by EarthRights International...

The suit arises out of the IFC’s reckless lending for a disastrous coal-fired power plant project that the IFC helped build on the coast of Gujarat, India.

In addition to being a financial disaster, the project has destroyed natural resources...

For years, the IFC has branded itself as a global leader in responsible business...[but] the IFC has not always practiced what it preaches, occasionally pursuing investments despite knowing quite well that they will bring enormous harms to local communities...

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