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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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27 February 2020

USA: Lower court rules Intl. Finance Corporation is immune from suit in Indian fishermen's lawsuit over pollution from coal-powered plant

Author: EarthRights International

'Farmers and Fishermen to Challenge World Bank Group Immunity Ruling', 18 Feb 2020

A fishing and farming community in Gujarat, India will challenge a ruling from a federal judge in the District of Columbia that the International Finance Corporation (IFC) – part of the World Bank Group – is immune from being sued for damages inflicted by a coal-fired power plant that it negligently funded. EarthRights International represents the community, which first filed the Jam v. IFC suit in 2015, and won a decision from the U.S. Supreme Court last year that the IFC does not have “absolute” immunity to all lawsuits. On Friday evening, United States District Judge John D. Bates again granted the IFC’s motion to dismiss, finding that the IFC is immune under the facts of this case...

The construction and operation of the 4,150MW power plant along the Gujarat coast is harming livelihoods and destroying the natural resources that generations of local families have relied on for fishing, farming, salt-panning, and animal rearing. The plaintiffs originally tried to raise their concerns through the IFC’s internal grievance mechanism, but when the IFC’s leadership ignored the grievance body’s conclusions, they filed suit in the United States as a last resort... 

Jam v. IFC marks the first time project-affected communities have taken legal action to hold an international financial institution like the IFC accountable for funding and enabling a harmful project. On February 27, 2019, in a historic 7-1 decision, the U.S. Supreme Court decided that international organizations like the World Bank Group can be sued in U.S. courts in certain cases. In Friday’s decision, however, Judge Bates decided that the Jam case does not qualify, because, he ruled, it is not “based upon a commercial activity carried on in the United States.”...

The IFC’s own internal compliance mechanism, the Compliance Advisor Ombudsman (CAO), issued a scathing report in 2013 confirming that the IFC had failed to ensure the Tata Mundra project complied with the environmental and social conditions of the IFC’s loan at virtually every stage of the project and calling for the IFC to take remedial action... 

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17 January 2020

USA: Lower court to decide on Intl. Finance Corporation's immunity in Indian fishermen lawsuit over pollution from coal-fired power plant

Author: Jennifer Hijazi, E&E News (USA)

"World Bank coal case a testing ground for climate liability," 15 Jan 2020

A David-versus-Goliath battle between aggrieved Indian villagers and an arm of the World Bank last year led the nation's highest bench to conclude that international financiers aren't immune to challenges in U.S. courts.

Budha Ismail Jam v. International Finance Corp., which is now moving forward in a lower court, could also apply pressure on other global institutions to address climate change protections in their investment strategies, legal experts say.

While the case is still in progress in the U.S. District Court for the District of Columbia, the threat of rising litigation following the Supreme Court's ruling is clear, said Erika Lennon, senior attorney at the Center for International Environmental Law, which has filed briefs in support of the villagers...

Attorneys in the case will lock horns in D.C. District Court today over whether the IFC, a branch of the World Bank that finances private projects in developing areas, should be on the hook for backing a coal plant that ravaged the livelihoods of residents in a nearby fishing village in India's state of Gujarat.

Budha Ismail Jam and other fishermen sued IFC on the grounds that it approved a $450 million loan for the Tata Mundra Ultra Mega Power Project without adequately ensuring that developers would adhere to environmental standards...

Knox cautioned against overstating the implications of the case, but he said the Jam decision reveals opportunities to pursue claims for risky projects outside of remedies available through the IFC or other institutions.

"It does open the door to suits against a class of really important actors in the climate financial world that, before Jam, it looked like couldn't be sued at all," he said.



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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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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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27 February 2019

Jam et al. v. International Finance corp.

Author: Supreme Court of the United States

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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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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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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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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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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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