After a federal judge declared that cases giving the World Bank Group “absolute immunity” from lawsuits were “wrongly decided,” communities represented by EarthRights International (ERI) have filed a petition asking the full D.C. Circuit Court of Appeals to revisit its immunity doctrine. In June, a three-judge panel of the D.C. Circuit ruled that the International Finance Corporation (IFC), the private-lending arm of the World Bank Group, could not be sued for its role in the controversial Tata Mundra coal-fired power plant that has devastated fishing and farming communities in Gujarat, India. The case is Budha Ismail Jam v. IFC.
In its June ruling, the panel concluded that previous decisions concerning international organizations required the court to find the IFC immune from suit in this case. Judge Nina Pillard, however, wrote a separate opinion that criticized those decisions as “wrongly decided” and suggested the full court should reconsider them.
“The panel’s ruling gives international organizations like the IFC unparalleled immunity, insulating them from legal accountability regardless of how much harm they cause,” said Richard Herz, senior litigation attorney at ERI. “Such sweeping immunity, which is far greater than the immunities enjoyed by sovereign foreign governments, is inconsistent with multiple Supreme Court precedents, and is contrary to the IFC’s own development mission.”
Following Judge Pillard’s suggestion, the plaintiffs’ petition requests rehearing “en banc” – in front of all active D.C. Circuit judges. The plaintiffs are optimistic that the full D.C. Circuit will reconsider the case.
“We will not give up our struggle for justice,” said Budha Jam, a plaintiff in the case.
“This decision tells the world that the doors of justice are not open to the poor and marginalized when it comes to powerful institutions like IFC,” added Gajendrasinh Jadeja, the head of Navinal Panchayat, a local village involved in the case. “But no one should be above the law.”
The plaintiffs filed suit against the IFC in April 2015 over the destruction of their livelihoods and property and threats to their health caused by the IFC-funded plant. The IFC recognized from the start that the Tata Mundra plant was a high-risk project that could have “significant” and “irreversible” adverse impacts on local communities and their environment. Despite knowing the risks, the IFC provided a critical $450 million loan, enabling the project’s construction and giving the IFC immense influence over project design and operation. Yet it failed to take reasonable steps to prevent harm to the communities the IFC is supposed to protect and to ensure that the project abided by the required environmental and social conditions for IFC involvement.
The plant has destroyed the local marine environment and the fish populations that fishermen like Mr. Jam rely on to support their families, and vital sources of water used for drinking and irrigation. Coal ash contaminates crops and fish laid out to dry and has led to an increase in respiratory problems.
The IFC’s own compliance mechanism, the Compliance Advisor Ombudsman, issued a scathing report in 2013 confirming that the IFC had failed to ensure the Tata Mundra project complied with the conditions of the IFC’s loan. Rather than follow CAO’s recommendation for remedial action, the IFC rejected most of its findings, and ignored others. Plaintiffs had no other recourse but to sue the IFC. In its ruling last month, the panel recognized the “dismal” situation of the Plaintiffs, noting the IFC did not deny that the plant had caused substantial damage, and yet found the IFC could not be sued.
The harms suffered by the plaintiffs are all the more regrettable because the project made no economic sense from the beginning. In fact, in the past month, Tata Power, which owns the plant, has begun trying to unload a majority of its shares in the project for 1 rupee (less than 2 cents) because of the losses it has suffered and will suffer going forward.
The plaintiffs argued that the IFC has waived immunity because this suit promoted the IFC’s mission, which includes the goals of reducing poverty without harming its projects’ neighbors. The IFC argued that it is not bound by its own mission.
“The court’s judgment supports the arrogance of lenders like IFC, who disregard the law, their own safeguard policies, and even the findings of their accountability mechanisms,” said Dr. Bharat Patel of Machimar Adhikar Sangharsh Sangatha (Association for the Struggle for Fisherworkers’ Rights), which is a plaintiff in the case. “This sends the wrong message to institutions like IFC – that you can continue to lend money to bad projects, causing irreversible damage to people and environment and no law will hold you accountable.”
EarthRights International (ERI) is a nongovernmental, nonprofit organization that combines the power of law and the power of people in defense of human rights and the environment, which we define as "earth rights." We specialize in fact-finding, legal actions against perpetrators of earth rights abuses, training grassroots and community leaders, and advocacy campaigns, and have offices in Southeast Asia, the United States and Peru. More information on ERI is available at http://www.earthrights.org.