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

Tata power. Credit: Earth Rights International

In 2015, Indian fisherman and farmers filed a lawsuit against the IFC in US federal court over environmental damage form the Tata Mundra plant which the IFC financed. IFC argued they can not be sued because the did not engage in commercial activity and should be immune from suit. The case is ongoing. 


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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.

In January 2020, the US District Court heard oral arguments from the parties. IFC argued they did not engage in commercial activity by issuing and managing a loan and therefore should still be immune from suit. Plaintiffs countered issuing a loan for the coal-fired plant is commercial activity and since that loan was issued and managed by the IFC headquarters in D.C., there is sufficient contacts with the United States.

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23 April 2015

Communities Sue World Bank Group In U.S. Federal Court for Destructive Coal-Fired Power Plant

Author: EarthRights International

Today fishing communities and farmers from India represented by EarthRights International (ERI) filed suit against the International Finance Corporation (IFC)…in federal court in Washington, D.C. The plaintiffs allege that the IFC caused the loss of their livelihoods, destroyed their lands and water, and created threats to their health by funding the Tata Mundra coal-fired power plant in Gujarat, India. The…power plant, owned by Tata Power, began operating at full capacity in 2013…The thermal pollution discharged from the plant’s cooling system has led to a dramatic decline in the fish populations that local fishing communities depend on…The substantial coal dust and fly ash coming from the plant and its coal conveyor belt is also harming local farms, the quality of fish and salt from the region, and the health of local people.

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23 April 2015

Jam, et al. v. International Finance Corporation - Class Action Complaint For Damages and Equitable Relief

[Full text of complaint filed in US District Court for the District of Columbia.]

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23 April 2015

Lawsuit Accuses World Bank Arm Of 'Mission Failure'

Author: Michael Hudson & Barry Yeoman, International Consortium of Investigative Journalists

The World Bank Group caused serious harm to fishers, farmers and villagers in northwest India by bankrolling a giant coal-fired power plant on an ecologically fragile stretch of coastline, a lawsuit filed Thursday in U.S. federal court in Washington argues. The suit accuses the World Bank Group’s private-sector lending arm, the International Finance Corporation (IFC), of “irresponsible and negligent conduct” in handling its $450 million financing package for the coal plant. Lawyers for EarthRights International…filed the case on behalf of people living and working near the coal plant…The IFC would not comment directly on the lawsuit’s claims. An IFC spokesperson provided a statement saying that the Tata Mundra plant “provides reliable power to rural and urban-based domestic consumers…” The spokesperson said the IFC and the plant’s operators have been working to address local community concerns.

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5 May 2015

Gujarat fishermen sue IFC in US Court for funding Tata Power’s Mundra UMPP

Author: Premal Balan, TNN

Fishing communities and farmers from Mundra in Kutch district…filed suit against the International Finance Corporation (IFC), the private-lending arm of the World Bank Group, in federal court in Washington, DC, through their representative EarthRights International (ERI). The IFC provided a $450 million loan to the Tata Mundra UMPP. As per IFC's rules demand that its borrowers take precautions to protect vulnerable communities' and the environment. IFC is under obligation to supervise, monitor and enforcing these rules. The fishermen have alleged that the IFC caused the loss of their livelihoods, destroyed their lands and water, and created threats to their health by funding the Tata Power's coal-fired ultra-mega power plant in Mundra, Kutch.

1 July 2015

Jam, et al. v. International Finance Corporation - Defendant International Finance Corporation's Memorandum of Law in Support of its Motion to Dismiss

Author: White & Case, counsel for International Finance Corporation

This case involves the alleged environmental impact of a power plant in Gujarat, India…The sole U.S. touch-point of this entire case is that one minority lender to the project company is an international organization, International Finance Corporation (“IFC”), which happens to be head-quartered in Washington, but with which Plaintiffs have no legal relationship. Given the identity of the parties and the locus of the claims, this Court should dismiss this action in its entirety with prejudice for the following reasons. First, IFC is entitled to absolute immunity under the International Organizations Immunities Act…Second, the complaint should be dismissed in its entirety on grounds of forum non conveniens…Third, Plaintiffs have failed to join at least three indispensable parties to this suit…

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13 July 2015

World Bank Group Claims "Absolute Immunity" Allows it to Avoid Responsibility for Destructive Coal Power Plant

Author: EarthRights International

The International Finance Corporation (IFC), the World Bank Group’s private lending arm, is claiming in court that it cannot be sued for enabling projects that destroy local communities’ health and livelihoods, no matter how much harm it has caused. In April, fishing communities and farmers represented by EarthRights International (ERI) filed suit in Washington, D.C., against the IFC over the destruction of their livelihoods and property and threats to their health caused by the IFC-funded Tata Mundra coal-fired power plant in Gujarat, India. The IFC has now asked the federal court to dismiss the case based on its claim that it is entitled to “absolute immunity.”…The IFC argues that it should not be accountable in court because the Compliance Advisor Ombudsman (CAO), the IFC’s internal accountability mechanism, “provides Plaintiffs with an alternative means of recourse.”

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11 November 2015

Indian fishermen & farmers sue Intl. Finance Corp. in US over environmental damage from power plant

Author: Matt Kennard & Claire Provost, Guardian (UK)

“Fishermen and farmers sue World Bank lending arm over power plant in India”, 10 Nov 2015

In the first case of its kind against the private investment arm of the World Bank, fishermen and farmers from north-western India are suing the International Finance Corporation (IFC) in a US federal court over a $450m loan for a coal-fired power plant.  The communities say the IFC has “destroyed their livelihoods” by reducing fish stocks and damaging the environment…[T]he IFC says the complaint…“must be dismissed in its entirety” because the IFC is entitled to immunity…“What are they afraid of?” asks Kristen Genovese, from [SOMO]…“you can sue your government, you can sue corporations. Why can’t you sue the Bank? Why is it above the law? You need to have checks and balances.”  At the moment…“the entire World Bank group essentially plays by its own rules”…In 2008, [the IFC] announced a $450m loan for the…“ultra mega power plant”…The project was billed as critical to providing cheap and reliable power for India’s industrialisation…[L]ocal communities say it has done more harm than good…The current case is important…not just for the plaintiffs to “get redress for their own suffering but also to ensure that other communities around the world don’t endure what they’ve endured”…

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28 March 2016

District Court Rules World Bank Can’t be Sued

Author: Valentina Stackl, EarthRights International

A federal district court in Washington, D.C., ruled last week that the International Finance Corporation (IFC), the private lending arm of the World Bank Group, has absolute immunity and thus cannot be sued in the United States...The district court concluded that it was required to find that the IFC is entitled to absolute immunity based on previous decisions from the D.C. Circuit Court of Appeals. The plaintiffs had argued that recent Supreme Court cases addressing immunity overturned the D.C. Circuit’s decisions. The district court did not consider that argument, but instead held that it should be heard and decided by the D.C. Circuit on appeal...From the start, the IFC recognized that the Tata Mundra project was a high-risk project that could have “significant” and potentially “irreversible” adverse impacts on local communities and their environment. Yet it failed to take reasonable steps to prevent harm to the communities and to ensure that the project abided by the required environmental and social conditions....

31 March 2016

World Bank lending arm sees off lawsuit by Indian fishermen

Author: Claire Provost & Matt Kennard, Guardian (UK)

A Washington DC judge has ruled that the World Bank cannot be sued in a case brought by Indian fishermen and farmers who said that an investment by the Bank’s private sector arm in a giant coal-fired power plant had “destroyed their livelihoods”.In 2008 the International Financial Corporation (IFC) branch of the Bank announced a $450m loan for a subsidiary of the Tata Group conglomerate [Coastal Gujarat Power Limited (part of Tata Power)] to build the power plant in Gujarat...Their lawsuit marked the first time a local community had sued the IFC in the US courts... US district judge John Bates...accept[ed] the IFC’s argument that it is immune from the suit...The decision is likely to inflame critics of the World Bank, who say it is almost impossible to hold the organisation to account. 

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5 April 2016

USA: IFC claims “absolute immunity” to avoid justice. But will it hold up in court?

Author: Michelle Harrison, EarthRights International, on IFI Governance

...The lawsuit, Jam v. International Finance Corporation, brought by EarthRights International on behalf of the communities, will likely require the court to determine whether, and under what circumstances, the IFC can be sued...The case has raised two major immunity questions. First, is the IFC entitled to “absolute immunity” or instead to the same “restrictive” immunity that currently applies to foreign governments (known as “foreign sovereign immunity”)? Second, even if the IFC is ordinarily deemed “absolutely immune,” has it nonetheless waived immunity to this suit in its Articles of Agreement?...The court concluded that it was required to find that the IFC is entitled “absolute immunity” based on previous decision from the DC Circuit...As to the question of waiver, the court ultimately determined that the IFC had not waived immunity in this case, noting that prior court decision have thus far only found immunity to be waived where the plaintiff has a commercial relationship with the IFC.....

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