Landmark corporate accountability case resulted in critical reforms for the World Bank’s lending arm. April 26, 2022 New Delhi: Last evening India time, the U.S. Supreme Court denied a petition from a fishing community...
Historic Supreme Court Win: World Bank Group Is Not Above The Law
In a historic 7-1 decision, the U.S. Supreme Court decided in Jam v. IFC that international organizations like the International Finance Corporation of the World Bank Group do not enjoy absolute immunity.
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.
Analysis of the Judgement
The Supreme Court Rules in Jam v. International Finance Corporation (Lawfareblog.com)
Wake Up World Bank (Down To Earth)
US Supreme Court Construes Scope of Immunities in Jam (Lexology.com)
No Longer Above The Law, The World Bank Faces Fight Of Its Life (International Consortium of Investigative Journalists)
The World Bank Must Clean up its Act (Nature)
Jam v. IFC – What does it mean for Accountability? (Green Climate Fund)
The US Supreme Court Judgment: A Challenge to World Bank’s unfettered immunity (Committee for the Abolition of Illegitimate Debt)
US Supreme Court rules against the World Bank’s claim of absolute immunity (Brettonwoodsproject.org)
The World Bank’s legacy of environmental destruction: a case study (Open Democracy)
Coal-Ravaged Indian Fishers Take to the Supreme Court (Sierra Magazine)
Media Coverage of the Ruling
Gujarat Farmers Win The First Round Against World Bank (Bloomberg Quint)
No Absolute Immunity For World Bank Affiliate: US Supreme Court (Down To Earth)
US Supreme Court Revives India Power Plant Lawsuit (MoneyControl.com)
World Bank’s Legal Immunity Stripped, Opening Door for Lawsuits (International Consortium of Investigative Journalists)
What does the US Supreme Court’s decision on IFC impunity mean for Indian fishermen? (Business and Human Rights Resource Centre)
IFC’s kettle of fish (The Statesman)
Gujarat’s Mundra Fisherfolk Prepare For Long Battle (Hindustan Times)
Photos: Tata Mundra
Some key documents on the case:
- Client Stories
- IFC Motion to Dismiss – July 2015
- Jam v. IFC Complaint – April 2015
- Jam v. IFC Order Granting Motion to Dismiss – March 2016
- Dr. Erica R. Gould Amicus for Appellant – August 2016
- Daniel Bradlow Amicus for Appellant – August 2016
- International Bank for Reconstruction and Development, et. al Amicus for Appellee – November 2016
- Jam v. IFC Appellee Brief – December 2016
- Jam v. IFC Appellants Opening Brief – December 2016
- Jam v. IFC – Appellant Reply Brief – December 2016
- Opinion – June 2017
- Petition for Rehearing En Banc – July 2017
- Jam v. IFC Cert Petition – January 2018
- Transcript of the Arguments at the Supreme Court of the United States of America
Financial Corporation [IFC], the private lending arm of World Bank Group, in India funds some of the country’s most notorious and abusive companies. Recipients of indirect IFC funds include Vedanta Resources, NHPC Limited and Jindal Steel & Power, which have well-documented records of complicity in grave human rights violations and environmental destruction. These companies would have little chance of receiving direct assistance from the IFC. Yet by outsourcing its development funds to for-profit commercial banks, the IFC is financing these companies through back channels, concealing its support from public scrutiny. In doing so, the IFC is providing little oversight in how its funds are used
The IFC’s investments in India’s financial sector are part of a global pattern. Over the past decade, the IFC has increasingly outsourced its development funds to third parties in the financial sector, such as banks, private equity funds and insurance firms. After years of providing loans mostly to companies and projects, this represents a sea change in how the World Bank Group member does business. Yet as this portfolio has grown, the IFC has been consistently unwilling to take responsibility for the negative impacts. Between 2005 and 2014, the IFC invested $520 million in one Indian infrastructure bank, IDFC, and five Indian commercial banks: ICICI, HDFC, Kotak Mahindra, Yes and Axis. These banks are exposed to vast swathes of the Indian economy. After receiving these funds, the banks went on to provide or arrange tens of billions of dollars in general corporate and project-specific financing for at least 12 of India’s most socially irresponsible corporations, including:
- NHPC Limited, which owns dams that have submerged the homes, forests and farmland of hundreds of thousands of people without restitution and damaged crucial waterways.
- Vedanta Resources, which attempted to displace and carve up the sacred land and forests of the Dongria Kondh tribe.
- Eveready Industries, formerly known as Union Carbide India, which was responsible for the Bhopal gas disaster, the worst industrial accident in history.
- Zuari AgriSciences, a cottonseed company that has been implicated in the worst forms of child labour.
- Adani Power, whose Mundra coal plant, port and the special economic zone have polluted the coast of Gujarat, destroyed mangroves and displaced local fishing families.
IFC’s intermediary, ICICI, even helped Adani acquire the controversial Carmichael coal mine in Australia. In 2010, ICICI and five other banks provided a $250 million loan to Adani Enterprises to acquire the Carmichael coal exploration rights from Linc Energy. The mine will be one of the world’s largest if it moves forward, despite deep opposition from the Australian public. It is expected to damage the Great Barrier Reef and create more annual carbon dioxide emissions than New York City, according to Australia Institute.
More on IFC’s lending through Financial Intermediaries at:
The weakest link in Development lending http://www.business-standard.com/article/opinion/joe-athialy-the-weakest-link-in-development-lending-114041701339_1.html
New report reveals the World Bank’s murky financial entanglements with India’s most irresponsible corporations: https://www.inclusivedevelopment.net/new-report-reveals-the-world-banks-murky-financial-entanglements-with-indias-most-irresponsible-corporations/
Bankrolling India’s Dirty Dozen https://www.inclusivedevelopment.net/wp-content/uploads/2016/12/Outsourcing-Development-India.pdf
Outsourcing Development: Lifting the veil on the World Bank Group’s lending through financial intermediaries https://www.inclusivedevelopment.net/wp-content/uploads/2016/09/Outsourcing-Development-Introduction.pdf
Outsourcing Development: Lifting the Veil on the World Bank Group’s Lending Through Financial Intermediaries https://www.inclusivedevelopment.net/wp-content/uploads/2016/09/Outsourcing-Development-Climate.pdf
THE SUFFERING OF OTHERS The human cost of the International Finance Corporation’s lending through financial intermediaries https://www.inclusivedevelopment.net/wp-content/uploads/2015/04/ib-suffering-of-others-international-finance-coperation-020415-en2.pdf
More on Tata Mundra Ultra Mega Power Project financed by IFC at:
More on GMR Kamalanga Project financed by IFC at http://www.cenfa.org/projects-in-focus/gmr-kamalanga-energy-limited/
More on Adani Ports and SEZ Ltd finances by IFC at http://www.cenfa.org/projects-in-focus/adani-ports-and-sez/
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