Skip to main content

Tata Mundra lawsuit: US SC hears arguments against World Bank funders' total immunity

Counterview Desk
Earth Rights International (ERI), a US-based non-governmental, nonprofit organization, specializing in fact-finding, legal actions against perpetrators of earth rights abuses, training grassroots and community leaders, and advocacy campaigns, with offices in Southeast Asia, the United States and Peru, is involved in fighting a crucial lawsuit that will determine whether international organizations, like the World Bank Group, are absolutely immune from lawsuits in the United States.
The lawsuit, Jam v International Finance Corporation (IFC), involves the World Bank's private lending arm, IFC-financed, coal-fired power plant in Kutch, India. The plaintiffs allege that improper design and construction has led to devastating impacts on the local fishing and farming communities. They originally tried to resolve these issues through the IFC’s own compliance office, and reluctantly filed suit as a last resort.
The legal principle involved, however, extends beyond this case; absolute immunity would prohibit any suit for negligence at the Washington DC headquarters of an international organization, or for injuries from motor vehicle accidents. The US government, which is supporting the plaintiffs at the Supreme Court, pointed this out during the oral arguments, which took place in the US Supreme Court, on October 31.
At the Supreme Court, some justices expressed skepticism of the IFC’s position. When the IFC’s counsel argued that Congress had intended to give international organizations “virtually absolute immunity,” and not simply the same immunity that foreign governments enjoy, Justice Elena Kagan asked, “Why didn’t Congress just say that?”
A decision can be expected by June 2019.

After the arguments ended, those involved in fighting the case gave following statements:

  • “People in Kutch have already lost whatever they had. Through this case, we want to ensure that future communities will not face what we faced.” – Dr. Bharat Patel, the head of fishworkers’ rights group MASS, one of the plaintiffs in the case
  • “If the IFC had proactively addressed these issues, we probably would not be in court today. IFC was so emboldened by the immunity it enjoyed, that they ignored the findings and the requests of the people affected by their investment. We hope this case will put an end to that.” – Joe Athialy, Executive Director of the Centre for Financial Accountability, India
  • “Immunity from all legal accountability does not further the development goals of international organizations. It simply leads them to be careless, which is what happened here. Just like every other institution, from governments to corporations, the possibility of accountability will encourage these organizations to protect people and the environment.” – Marco Simons, General Counsel, Earth Rights International
  • “The commercial activities of international organizations such as the IFC can have a significant impact on lives of Americans and others around the world. It's therefore critically important for the Supreme Court to reject the notion that these institutions have greater legal immunity for these activities than even foreign countries have.”– Prof. Jeffrey Fisher, Co-Director, Stanford Law School Supreme Court Litigation Clinic

An ERI note on the case:

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 Mr. 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.
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.
The IFC 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.
The harms suffered by the plaintiffs are all the more regrettable because the project made no economic sense from the beginning. Last year, in fact, Tata Power began trying to unload a majority of its shares in the project for 1 rupee (a few cents) because of the losses it has suffered and will suffer going forward. At the moment, the plant is operating at only 1/5 capacity in part because India has an oversupply of electricity.
Against this background, several individuals harmed by the plant, as well as MASS and a local village, filed suit against the IFC in US federal court in 2015. EarthRights International filed the suit in Washington, DC, where the IFC is headquartered. The federal district court ruled that the IFC had immunity from suit and dismissed the case in 2016; the U.S. Court of Appeals for the DC Circuit affirmed the decision in 2017.
The DC circuit ruled that the IFC had “absolute immunity” and could not be sued for its role in the project. The court acknowledged, however, the “dismal” situation the project has created for the plaintiffs and their community, including the destruction of their livelihoods, property, and the serious threats to their health, and noted the IFC did not deny those harms. The communities sought review of that decision by the US Supreme Court.
The central legal question the Supreme Court will consider is how to interpret the International Organizations Immunities Act (IOIA), a 1945 US law that gives international organizations “the same immunity” from lawsuits “as is enjoyed by foreign governments.” In 1952, the U.S. government began restricting the immunities given to foreign governments, and in 1976 Congress passed a law that allowed lawsuits for injuries in the United States and commercial activities of foreign states.
Congress was motivated in part by the prospect of immunity for traffic accidents and other injuries in Washington, DC, as well as the fact that foreign states were increasing engaging in operations like commercial lending in the same manner as private banks.
The DC Circuit, however, decided that international organizations are entitled to the immunities that foreign states received in 1945, and further ruled that in 1945 that meant “absolute immunity.” This interpretation of the law gives international organizations substantially broader immunity than that of foreign governments.
The plaintiffs have argued – and the Court of Appeals for the Third Circuit has held – that the IOIA should be read to give international organizations only the same restrictive immunity of foreign governments. Since a foreign government would not be immune from this suit, the IFC, which is made up of foreign states, should not be immune either.
The IFC is headquartered in Washington, DC, along with the rest of the World Bank Group, because the U.S. is by far the largest shareholder in these organizations. The US government, however, has long supported the plaintiffs’ interpretation of the law, that international organizations can be sued for their commercial activities or for causing injuries in the United States. The Departments of Justice and State submitted an amicus curiae brief in support of this position, as did members of Congress from both parties.

Comments

TRENDING

#MeToo moment in Hyderabad Urdu varsity? Two girl students seek action against authorities

Counterview Desk
Has the #MeToo movement reached Maulana Azad National Urdu University (MAANU)? It would seem so if a recent letter by newly-appointed chancellor Firoz Bakht Ahmed to MAANU vice-chancellor Dr Aslam Parvaiz is any indication. Seeking reinstatement of two girl victims of “sexual harassment and humiliation”, the letter specifically names head of the department of the Media Centre for Journalism, suspecting, the problem could be much deeper.
Text of the letter: It is a matter of utmost perturbation for me to receive the two representations from the girls studying in the MCJ (Media Center for Journalism) regarding their sexual and subsequently, mental and social harassment at the hands of Prof Ehtesham Ahmad Khan, the HOD, MCJ.
We do not know, how many girls have been exploited by him and preferred to be silent for saving their family’s honour; however, there are two brave girls who stood to the depraved advances and misuse by Prof Ehtesham and came up with written complai…

"Ineligible" funding of Sardar Statue in Gujarat: CAG tells Central PSUs, it's not a heritage CSR activity

By Our Representative
The Comptroller and Auditor General (CAG) of India, in its recent report on Central Public Sector Enterprises (CPSE), has qualified public sector undertakings’ (PSUs') funding the 182-metre world’s highest Sardar Statue, currently being constructed in the Narmada river downstream of the Sardar Sarovar dam as an “ineligible” corporate social responsibility (CSR) activity.

Gujarat BJP MLAs, youth leader "incited" attack on North Indians: Cong releases video

Counterview Desk
Senior Gujarat Congress leader Shaktisinh Gohil, currently in charge of Bihar and national spokesperson, All-India Congress Committee, has sent a legal notice to chief minister Vijay Rupani threatening criminal case and civil defamation suit for accusing him with "baseless statement" that he was responsible for attacks on north Indians in Gujarat.

29th "NRC-related" suicide in Assam, as Nirod Baran Das takes his life by hanging on a fan

By Our Representative
Reporting 29th case of National Register of Citizens (NRC)-driven suicide in Assam, one of India’s human rights campaign sites has said that, on October 20, tragedy struck Kharupetia town in Darrang district of Assam, when a retired school teacher and advocate Nirod Baran Das “took his life by hanging himself to a fan in his home.” The report adds, “The NRC process has so far claimed over two dozen such lives in the past four months alone.”

"Highly irregular" for PSUs to fund Sardar Statue under Corporate Social Responsibility

Counterview Desk
In a letter to I Srinivas, secretary, Ministry of Corporate Affairs, Government of India, former secretary (economic affairs), Ministry of Finance, EAS Sarma, has raised questions on the funding of the Sardar Patel statue in South Gujarat by Central Public Sector Undertaking (CPSUs) relying on the Comptroller and Auditor General report (No 18/2018).

Murder of Tamil Nadu teenage Dalit girl: "Stoic silence" despite #MeToo movement

Counterview Desk
Brinelle D'souza, who is with the Centre for Health and Mental Health, School of Social Work, Tata Institute of Social Sciences, Mumbai, has prepared a strong statement to protest the brutal murder of 13-year-old Rajalakshmi. "Other than a few media reports, this gruesome killing has not caught national attention despite a very vibrant #MeToo campaign currently underway", regrets D'souza.

Post-MJ Akbar resignation: #MeToo movement and fears of backlash

By Sheshu Babu*
For the last few days, #MeToo movement has picked up momentum and many women are coming out with horrific tales of severe harassment in their past lives. They are not afraid anymore to expose famous persons including those at ministerial levels. As a senior journalist Neeraja Chowdhury opined (“An exit, a beginning”, October 18, 2018, indianexpress.com), "The #MeToo revelations are like the eruption of a volcano which was imminent, given the journey working women have covered. It was not easy to make public what they had gone through,and take on powerful men.”

Bank account frozen, raid on Amnesty office: Govt of India "treating" human rights NGOs like criminal enterprises

By Abhirr VP*
Amnesty India’s bank accounts have been frozen by the Enforcement Directorate, effectively stopping its work. Amnesty India is thus the latest target of the government’s assault on civil society in the country. The accounts of Greenpeace India were frozen earlier this month.

J&K Governor's rule: BJP's "failure" to go ahead with 44-plus strategy

By Syed Mujtaba Hussian*
Jammu and Kashmir (J&K) continues to witness cataclysm of events ever since the killing of editor-in-chief of “Rising Kashmir”, Shujaat Bukhari, followed by the BJP’s deliberated parting of ways with its coalition partner, People’s Democratic Party (PDP) and imposition of Governor rule.

NTPC's "poor" track record on workers' safety, whether permanent or on contract

Counterview Desk
A recent report, “The Dark Side of NTPC: A Critical Look at the Social and Environmental Footprints of NTPC”, traces the performance of one of the four Navaratnas which also happens to be a Fortune 500 company, the National Thermal Power Corporation (NTPC), pointing out that, while it has played, for over four decades, “pivotal role” in India’s quest for development, this development was energy intensive and has caused “a plethora of negative impacts to people, environment and sustainability over the years.”