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Gujarat power project: World Bank's group seeks "legal immunity" from suit on environmental destruction

By Our Representative
In an interesting twist to the case filed by an international NGO on behalf of Gujarat’s fishermen and farmers against the World Bank’s private lending arm, the International Finance Corporation (IFC), which funded a mega power project in Kutch, has reportedly invoked the International Organisations Immunities Act, 1945 of the US for immunity from the “suit and every form of judicial process.”
The suit, filed through the NGO EarthRights International in April against the IFC’s funding to the tune of $450 million for the coal-fired power plant in the District of Columbia, has alleged that the power plant has led to the destruction of livelihood of communities by reducing fish stocks and damaging the environment in Gujarat.
The IFC has said that the complaint, filed by the NGO EarthRights International in April this year on behalf of the fishermen and farmers, must be “dismissed in its entirety”, because the IFC is entitled to immunity from prosecution in the US under a treaty signed in 1945.
The British Guardian (November 10), which has reported the development, has said that, in a statement to EarthRights in July 2015, the IFC had argued that it should not be accountable in court because its internal accountability mechanism in the form of CAO, and “provides plaintiffs with an alternative means of recourse”.
The decision of the IFC has led to strong reaction among international NGOs. Kristen Genovese of the Centre for Research on Multinational Corporations (SOMO) in Amsterdam, has been quoted as saying, “Any other institution – you can sue your government, you can sue corporations. Why can’t you sue the Bank? Why is it above the law? You need to have checks and balances.”
The suit is based on a 2011 the IFC’s Compliance Advisor Ombudsman (CAO), which reported that the IFC failed to adequately consider “potentially harmful effects” of the power plant. The IFC dismissed the findings in its response to the CAO, which said it was “confident that the company’s management system effectively addresses [environmental and social] risks and impacts”.
Meanwhile, facts have come to light suggesting that there have strong internal ripples within the IFC for funding the project. The Guardian quotes a former senior IFC official as saying that there has been a “huge debate” internally among staff about funding of the project and its environmental impact.
The Guardian says, “The IFC has come under the spotlight in recent years for investments associated with alleged human rights abuses and environmental damage. In the past, civil society groups have called for a portion of the investment proceeds from the IFC to be put aside for some sort of compensation fund for when projects cause harm – though no such thing currently exists.”
The daily quotes Luiz Vieira, coordinator of the Bretton Woods Project, which tracks the World Bank and IMF, as saying: “There’s no remedy, there’s no fund where IFC then says, ‘We made a mistake – you lost your livelihoods, so we’ll provide you compensation.’”

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