On August 24 evening, a federal court ruled that the World Bank Group cannot be sued for any damage caused by its lending, despite last year’s Supreme Court ruling in the same case that these institutions can be sued for their commercial activity in the United States.
In Jam v. International Finance Corporation (IFC), US District Judge John D. Bates ruled that farmers and fishers from Gujarat, India, cannot sue the World Bank’s corporate lending arm for funding and enabling a disastrous coal power plant that has destroyed their livelihoods. The plaintiffs, represented by EarthRights International, will appeal.
In a landmark decision issued in March 2019, the Supreme Court ruled that IFC and other international financial institutions could be sued in cases based upon their commercial activity carried on in the United States. But Judge Bates concluded that a lawsuit over the IFC’s lending is not based upon IFC’s activity at all. He held that even if IFC knew when it made the loans that the power plant would harm these communities, the institution cannot be sued.
The court ruled that a lawsuit against IFC, for harms caused by IFC’s lending, is not based upon IFC’s lending, said Richard Herz, Senior Litigation Attorney at EarthRights. That is not right. The same law applies to foreign governments and their corporations, so this would mean that a Chinese state-owned bank that profits from causing harm to Americans in the United States cannot be sued here either.
The construction and operation of the 4,150MW Tata Mundra coal power plant along the Gujarat coast is harming livelihoods and destroying the natural resources that generations of local families have relied on for fishing, farming, salt-panning, and animal rearing.
The plaintiffs tried to raise their concerns through the IFC’s internal grievance mechanism, but when the IFC’s leadership ignored the grievance body’s conclusions, plaintiffs filed suit in the United States in 2015 as a last resort. In addition to its destructive impact on local communities, the power plant has been an economic albatross from the start; it has lost money since the day it started operating, causing its operator to fight with local governments to raise electricity rates from the low prices that had been promised.
While we are disappointed with the dismissal of the case, we are determined to appeal, said Bharat Patel, the head of the local fishermen’s organization, Machimar Adhikar Sangharsh Sangathan (Association for the Struggle for Fisherworkers’ Rights) (MASS), a plaintiff in the case. We will keep up our fight to hold the IFC accountable while demanding reparation for the damages caused to our community due to the IFC’s reckless lending.