This will be the first time the US Supreme Court will address the scope of international organisations’ immunity.

Mundra, Gujarat/New Delhi: Posing a challenge to the immunity enjoyed by international financial institutions thus far, the U.S. Supreme Court announced on May 21 that it would hear the landmark lawsuit, filed by the villagers of Mundra, Gujarat challenging the absolute immunity of powerful institutions like the International Finance Corporation (IFC).  The villagers were affected by the coal-fired Tata Mundra Ultra Mega Project, which was co-financed by the IFC.

Welcoming the US Supreme Court’s decision, Dr Bharat Patel, General Secretary, Machimar Adhikar Sangharsh Sangathan, one of the petitioners in the case, said “This is a victory of our relentless struggle to bring to justice the crimes committed by the Tata against the fishing community. IFC aided the process by turning a blind eye to it.”

The case, Jam v. IFC, filed in 2015 by the fishing communities and farmers affected by IFC-funded Tata’s Mundra Ultra Mega Project, challenged the absolute immunity enjoyed so far by international organisations like IFC, the private lending arm of the World Bank Group.

The key legal question before the court is whether the International Organizations Immunities Act—which affords international organisations the “same immunity” from the suit that foreign governments have— confers the same immunity on such organisations as foreign governments have under the Foreign Sovereign Immunities Act.

The Supreme Court’s decision to hear their case will ensure that the Court will dwell upon the immunity of international organisations for the first time, and decide whether international organisations can be held accountable for their harmful conduct, or whether they enjoy the special status above the law that they claim.

“International organisations like the IFC are not above the law and must be held accountable when their projects harm communities. The notion of ‘absolute immunity’ is inconsistent with Supreme Court precedent, and it is contrary to the IFC’s mission as an anti-poverty institution. We are glad the Supreme Court has agreed to hear this case and hope it will correct this error,” said Richard Herz, Senior Litigation Attorney at EarthRights International (ERI) in a release.

Budha Jam, the main petitioner, said that the decision on this case would be keenly awaited by not only by the villagers but also across the world by the communities that are fighting the crimes of the international financial institutions. He said that he is hopeful that the US Supreme Court will not let them down.

Last year, the U.S. Court of Appeals for the D.C. Circuit had ruled that IFC had “absolute immunity” and could not be sued for its role in the controversial Tata Mundra coal-fired power plant that has devastated communities in Gujarat. The D.C. Circuit recognised the “dismal” situation the plant has created for the complainants, including the destruction of their livelihoods and property and the serious threats to their health, and noted that the IFC had not denied those harms. The court found the IFC could not be sued based on prior D.C. Circuit decisions. One of the judges, however, expressed strong disagreement with IFC immunity and noted that another federal court had rejected the prior D.C. Circuit immunity cases, which she thought were “wrongly decided.”

Press Release by Machimar Adhikar Sangharsh Sangathan

Media coverage of the US Supreme Court’s decision

Some key documents on the case:

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:

http://www.cenfa.org/tata-mundra-ultra-mega-project/

http://www.governancenow.com/views/columns/join-the-club-let-us-discuss-biodiversity-tata-power-adani

http://projects.huffingtonpost.com/worldbank-evicted-abandoned/india-uncounted

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/