US Supreme Court to Hear Case on Immunity of IFIs

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

New Delhi: The U.S. Supreme Court announced on May 21, 2018 that it would hear the landmark lawsuit, filed by the villagers of Mundra, 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 partially funded 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

Tata Mundra UMPP(CGPL)

Coastal Gujarat Power Limited (―CGPL or the ―company) will build, own and operate a 4,000MW (5 units of 800 MW each) ultra mega‘ supercritical technology based power plant at the port city of Mundra in the Kutch district of Gujarat, India (the ―project). CGPL is sponsored by Tata Power Company Limited (―Tata Power) who owns 100 per cent of CGPL. In May 2011, CGPL announced the successful completion of the steam blowing process at Unit 1. The four remaining units will be commissioned at subsequent intervals of four months each. The total project cost is estimated at about US$4.14 billion. IFC invested $450 million of its own capital in this project, which IFC has classified as a category A project, signifying that IFC believes there are potentially significant adverse social and environmental impacts that may be diverse or irreversible.

Financiers: A consortium of Banks including multilateral agencies and Exim Banks invests in this project which costs the US $4.14billion. Financing comprises of the equity of INR 42.50 billion, External Commercial Borrowings (ECB) of up to USD 1.8 billion and Rupee Loans of up to INR 55.50 billion. The ECBs include the International Finance Corporation, the Export‐Import Bank of Korea, Korea Export Insurance Corporation, the Asian Development Bank and BNP Paribas. National financial institutions (FIs) involved are SBI, the India Infrastructure Finance Company Ltd., Housing and Urban Development Corporation Ltd., Oriental Bank of Commerce, Vijaya Bank, State Bank of Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Travancore and State Bank of Indore.

Challenging IFC’s immunity in US Federal Court:

In 2015, Fishing communities and farmers from India filed a suit against the International Finance Corporation (IFC), the private lending arm of the World Bank Group, in federal court in Washington, D.C. In the suit, titled Jam v. IFC, the fish workers alleged that the IFC caused the loss of their livelihoods, destroyed their lands and water, and created threats to their health by funding the Tata Mundra coal-fired power plant in Gujarat, India. Earths Rights International is representing the fish workers community.

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