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Submissions in the case on the disastrous Tata Mundra power plant project demonstrate that immunity decision in the US Supreme Court has broad and dangerous consequences.

February 17, 2022, New Delhi – This week, prominent economic, legal, diplomatic, and civil society experts – including Joseph Stiglitz, a Nobel Prize-winning economist, and former Vice President and Chief Economist of the World Bank – submitted amicus briefs urging the United States Supreme Court to hear the case Budha Ismail Jam, et al v. IFC , (Tata Mundra case) concerning immunity from suit for the World Bank Group and foreign nations. Earth Rights International represents members of fishing and farming communities, and Machimar Adhikar Sangharsh Sangathan in Gujarat, India suing the World Bank’s private lending arm, the International Finance Corporation (IFC), over its role in funding a coal-fired power plant that destroyed local people’s livelihoods.

Former diplomats, including Joseph Stiglitz, urged the court: “The collective experience of amici in many countries teaches that the IFC must be held accountable for the social and environmental impacts of the projects its loans make possible. Internal IFC accountability procedures are ineffective. Judicial review is essential.”

In 2019, the US Supreme Court ruled that the IFC is not entitled to “absolute” immunity in the case but instead is subject to the same immunity as foreign governments. Applying those rules, the D.C. Circuit Court of Appeals last year ruled that IFC was still immune, in a decision with far-reaching consequences for foreign states’ accountability for everything from price-fixing to financing terrorism.

EarthRights has asked the Supreme Court to again take up the case and clarify the law – not just in this case, but whenever a foreign government is involved in financing or otherwise assisting wrongful conduct.

Marco Simons, General Counsel of EarthRights International, said:

“These distinguished experts show, as EarthRights argued, that the DC Circuit’s decision is wrong, and will immunize a wide variety of harmful conduct.

“Since the World Bank Group committed negligence at IFC’s headquarters in Washington, D.C., it should not be immune in this case and must be held accountable for the impacts of this project that it funded. But the DC Circuit decision would allow international organizations and foreign governments to abet wrongful conduct from US soil – such as state-owned banks financing terrorism, or state-owned companies joining with other businesses to commit fraud, breach contracts, steal technology, or fix prices – without any accountability at all.

“In this case, the IFC’s responsibility is clear. From the start, the IFC recognized that the Tata Mundra coal-fired power plant was a high-risk project that would significantly harm local communities and their environment. Despite knowing the risks, the IFC provided a critical $450 million loan, enabling the project’s construction. As predicted, the plant undermined water quality, contributed to air pollution, and harmed crops and fish populations that support local economies.”

Dr Bharat Patel, General Secretary, Machimar Adhikar Sangharsh Sangathan, one of the petitioners in the case, said: “Fishworkers and farmers in Mundra for over a decade now continue to suffer disastrous impacts of the project which has been financed by the IFC. If immunity is granted to these institutions it would be travesty of justice. We hope the US Supreme Court recognizes the seriousness and far reaching implications of this case on accountability of financial organisations and takes up the case.”

The IFC’s own internal compliance office issued a scathing report 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.

“The briefs filed today demonstrate the widespread condemnation among legal academics, diplomats, and civil society experts for the D.C. Circuit’s decision, which immunizes not only the IFC but also a wide swath of harmful foreign sovereign activity,” Marco added.

Speaking on this, Joe Athialy, Executive Director of the Centre for Financial Accountability, New Delhi, said “It is high time institutions like the IFC and the World Bank Group stop using the technicalities of law to evade their accountability to people. It would only be fair that the US Supreme Court takes up the case especially when the lives and human rights of thousands of fishworkers are at stake.”

Background

From the start, the IFC recognized that the Tata Mundra coal-fired power plant was a high-risk project that could have significant adverse impacts on local communities and their environment. Despite knowing the risks, the IFC provided a critical $450 million loan in 2008, enabling the project’s construction and giving the IFC immense influence over project design and operation. Yet the IFC failed to take reasonable steps to prevent the harms it predicted and failed to ensure that the project abided by the environmental and social conditions of IFC involvement.

As predicted, the plant has caused significant harm to the communities living in its shadow. Construction of the plant destroyed vital sources of water used for drinking and irrigation. Coal ash has contaminated crops and fish laid out to dry, air pollutants are at levels dangerous to human health, and there has already been a rise in respiratory problems. The enormous quantity of thermal pollution – hot water released from the plant – has destroyed the local marine environment and the fish populations that fishermen like Budha Ismail Jam rely on to support their families. Although a 2015 law required all plants to install cooling towers to minimize thermal pollution by the end of 2017, the Tata plant has failed to do so.

A nine-mile-long coal conveyor belt, which transports coal from the port to the Plant, runs next to local villages and near fishing grounds. Coal dust from the conveyor and fly ash from the plant frequently contaminate drying fish, reducing their value, damage agricultural production, and cover homes and property. Some air pollutants, including particulate matter, are already present at levels dangerous to human health, in violation of Indian air quality standards and the conditions of IFC funding, and respiratory problems, especially among children and the elderly, are on the rise.

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. IFC’s management responded to the CAO by rejecting most of its findings and ignoring others. In a follow-up report in early 2017, the CAO observed that the IFC remained out of compliance and had failed to take any meaningful steps to remedy the situation.

For more background on the case, visit the website.

To read the full Amicus Briefs:

  1. Diplomats Amicus Brief – Diplomats Amicus Brief
  2. CIEL Amicus Brief – CIEL Amicus Brief
  3. International Law Scholars Amicus Brief – Jam v. IFC 21-995 Intl Law Scholars Amicus Brief

Contact:

  1. Kate Fried, EarthRights International
    (202) 257.0057
    kate.fried@earthrights.org
  2. Dr Bharat Patel (Mundra, Gujarat, India)
    General Secretary, Machimar Adhikar Sangharsh Sangathan
    + 91 94264 69803
    bharatp1977@gmail.com
  3. Anuradha Munshi
    Centre for Financial Accountability, India
    +91 9792411555
    anuradha@cenfa.org
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