Skip to main content

US Supreme Court order "clears way" to file case on IFC funding of Tata Mundra plant

Counterview Desk
The Centre for Financial Accountability (AFC), a New Delhi-based NGO, referring to the US Supreme Court 7-1 order in the Jam vs International Finance Corporation (IFC) case, allowing individuals and organizations to sue international organizations like the World Bank Group, has said has said that this has opened the way to sue IFC funding of the power plant in Mundra, Gujarat.In a communique issued following the order, AFC, which is backing the members of local fishing and farming communities in the case because, allegedly, their "livelihoods, air quality, and drinking water have been devastated by the project", has said, "The IFC and the project developers knew about these risks in advance but nevertheless chose to recklessly push forward with the project without proper protections in place."

Text of the communiqué:

In a historic 7-1 decision, the US Supreme Court has decided in Jam v International Finance Corporation (IFC) that international organizations like the World Bank Group can be sued in US courts.The Court’s decision marks a defining moment for the IFC – the arm of the World Bank Group that lends to the private sector. 
For years, the IFC has operated as if it were “above the law,” at times pursuing reckless lending projects that inflicted serious human rights abuses on local communities, and then leaving the communities to fend for themselves.
International organizations like the IFC have long claimed they are entitled to “absolute” immunity, even as they engage in commercial activities, like the coal-fired power plant at the heart of this case. Because the relevant statute only gives the IFC the same immunity as foreign governments, and foreign governments do not have absolute immunity in US courts when they engage in commercial activities, the Supreme Court rejected this position: “The International Finance Corporation is therefore not absolutely immune from suit.”
The case involves an IFC-financed power plant in Mundra, Gujarat. The plaintiffs are members of local fishing and farming communities whose livelihoods, air quality, and drinking water have been devastated by the project. They alleged that the IFC and the project developers knew about these risks in advance but nevertheless chose to recklessly push forward with the project without proper protections in place.
The complainants originally tried to raise their concerns through the Compliance Advisor Ombudsman (CAO), the IFC’s internal grievance mechanism, but when the IFC’s leadership ignored the grievance body’s conclusions, they reluctantly filed suit in the United States as a last resort. The EarthRights International represented the villagers, along with the Stanford Law School Supreme Court Litigation Clinic.
The IFC is headquartered in Washington, DC, along with the rest of the World Bank Group, because the US government is by far the largest shareholder in these organizations. The US government has long supported the villagers’ interpretation of the law: that international organizations can be sued for their commercial activities or for causing injuries in the United States. The US Departments of Justice and State submitted an amicus curiae brief in support of the plaintiffs’ position, as did members of Congress from both parties.
The IFC argued that allowing it to be sued would be disastrous, but the Supreme Court, in an opinion by Chief Justice John Roberts, found these concerns to be “inflated.” The Court noted that, unlike many international organizations, the IFC’s founding members did not grant the organization absolute immunity in its charter.
The case is Docket No 17-1011. Justice Brett Kavanaugh recused himself, because he was on the US Court of Appeals for the DC Circuit when the case was heard there. Justice Stephen Breyer was the sole dissenter, arguing that a “broad exposure to liability” for international organizations runs counter to Congress’ original purpose in providing immunity.
Now that the Supreme Court has established that the World Bank Group can be sued, the case will return to the lower courts for further litigation.
Another case against the IFC is also expected to proceed in the U.S. District Court for the State of Delaware. The case, Juana Doe et al vs IFC, involves IFC projects that have been linked to murders, torture, and other violence by paramilitary groups and death squads in Honduras. EarthRights International represents the plaintiffs, whose identities are kept anonymous to protect them from retaliation.
Statements
  • “We are extremely happy with the decision of the Supreme Court of US. This is a huge victory for the people of Mundra in particular and other places in general, where World Bank’s faulty investments are wrecking communities and the environment. This is a major step towards holding World Bank accountable for the negative impacts their investments are causing.” – Dr Bharat Patel, General Secretary, Machimar Adhikar Sangharsh Sangathan, one of the plaintiffs in the case
  • “We are delighted with this judgment. This is a victory of all who have fought for a more accountable World Bank since the past many decades world over and has fought valiant struggles against Bank-funded projects on the ground, exposing the monumental human and environmental costs of their lending. This judgment will strengthen communities’ efforts to hold the Bank accountable and is a step in the direction of bringing accountability in financial institutions.” – Joe Athialy, Executive Director, Centre for Financial Accountability, New Delhi
  • “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, EarthRights International
  • “The commercial activities of international organizations such as the IFC can have a significant impact on the lives of Americans and others around the world. We welcome today’s decision.” – Prof. Jeffrey Fisher, Co-Director, Stanford Law School Supreme Court Litigation Clinic
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 fisherfolk like Mr 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.
The harms suffered by the plaintiffs are all the more regrettable because the project made no economic sense from the beginning. In 2017, in fact, Tata Power began trying to unload a majority of its shares in the project for one 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 one-fifth capacity in part because India has an oversupply of electricity.

Comments

TRENDING

Buddhist shrines were 'massively destroyed' by Brahmanical rulers: Historian DN Jha

Nalanda mahavihara By Our Representative Prominent historian DN Jha, an expert in India's ancient and medieval past, in his new book , "Against the Grain: Notes on Identity, Intolerance and History", in a sharp critique of "Hindutva ideologues", who look at the ancient period of Indian history as "a golden age marked by social harmony, devoid of any religious violence", has said, "Demolition and desecration of rival religious establishments, and the appropriation of their idols, was not uncommon in India before the advent of Islam".

Upholding labour rights, Nehruvian scientific temper, Rajni Patel opposed Emergency

By Harsh Thakor*  Rajni Patel, who died 40 years ago, whatever his flaws, had one great quality: his human touch to offer selfless service and ability to galvanise or influence human beings from all walks of life. Few people would ever go out of the way to help someone or serve as selflessly without aim of personal gain. Rajni championed Nehruvian secular ideas and scientific temper. As a master in public relations he revealed utmost humility. As a barrister, he never appeared against the trade unions or workers. A Fabien Socialist he opposed liberal capitalism and radical socialism. Unlike most lawyers, he did not succumb to the lure of amassing wealth. Rajni was born in Sirsa, in Gujarat, on the very day Gandhi set foot on Indian soil, on 9th January, 1915. He gained his baptism through one of Gandhi's speeches calling for the boycott of foreign goods, which was the virtual turning point of his life. Rajni toed Gandhi to organise boycott of foreign goods. Rajni was able to cros

Targeting mosques, churches: 'Roadmap' for 2025, RSS' centenary year?

416 years old Our Lady of Health Church, Sancoale, Goa  By Fr Cedric Prakash SJ*  Fascists use manipulative strategies aimed at whipping up sympathy and support from the majority community, to which they normally ‘belong’. They do so in a variety of insidious and subtle ways. In the past few months, they have gone overboard in their efforts to denigrate and demonize minorities in India, particularly Muslims and Christians. They have spewed hate and divisiveness through their venomous speeches; incited people to violence and have effectively used officialdom to further their vested interests. The results are there for all to see: greater polarisation of the majority community in a country which prided itself for its pluralism and diversity. Their meticulously planned agenda is in order to gain absolute power of the country in the 2024 national elections. More so it is also a roadmap towards 2025 when the Rashtriya Swayamsevak Sangh (RSS) will complete one hundred years of its existence.

Vadodara violence: Fine Arts Faculty alumni raise fingers at Varsity's political appointee

Hasmukh Vaghela with PM Counterview Desk  In a statement, alumni of the Faculty of Fine Arts (FoFA), Maharaja Sayajirao University (MSU), Baroda, Gujarat, referring to the “violence” by right-wing groups for displaying “objectionable” paintings that “hurt religious sentiments” at the one of India’s top fine arts institute May 5, have taken strong exception to “the assault and rustication” of one of the students, and lack of action taken against those who “violated” the institution and committed the act. Floated as an online petition seeking wider support, the FoFA alumni, in their statement, addressed to the vice chancellor, MSU, said, there should be “thorough” investigation in the whole incident and “immediate action” should be taken against syndicate member Hasmukh Vaghela, MSU, who sparked the assault, and “other co-conspirators” for breaching “university code of conduct and unlawful activities committed in broad daylight”. While the alumni statement doesn't say so, Vaghela

Gyanvapi case: Use of 'illegal' lawfare to keep the communal pot simmering

By Venkatesh Narayanan, Bobby Ramakant, Manoj Sarang* With a steady drumbeat of bad news for the lives of ordinary citizens --  inflation at a multi-year high , rupee at an all-time low , negative job creation and when all forward indicators as seen by industry leaders point to recessionary clouds on the horizon , what’s a serially-incompetent government to do?  Dust out their time-tested-citizen-distraction playbook. The Gyanvapi-Masjid case is all of this -- as a weapon of mass distraction. This zeitgeist of our times is best captured by a recent opinion piece : "The idea is to keep the pot on a perpetual boil, simmering at the top, whirling feverishly beneath. A restless society forever living precariously on the precipice arouses distrst, uneasiness, fear and discomfort, That is a toxic panoply for manufacturing rage, which can then be effortlessly mobilized at short notice. BJP is creating an eco-system of real-time instant delivery of hate-mongers. That is how we are sudde

World Bank proved right, Narmada is already a destructive project: Medha Patkar

By Rajiv Shah  Narmada Bachao Andolan leader Medha Patkar has said that the World Bank’s independent review mission, which brought out the Morse Commission report , has been proved right: The Sardar Sarovar dam has not only failed to live up to the loud promises made for irrigating large arid areas of Saurashtra and Kutch in Gujarat, those who were displaced and resettled in Gujarat are getting increasingly restive as many of them are unable to get the promised water for irrigation and some for drinking water too. While 50,000 families have been resettled in three states and 20,000 have received land rights as land or cash, the authorities have not calculated what should be done with 15,000 families, whose houses are acquired for Sardar Sarovar but following changing backwater levels of the Sardar Sarovar dam, they are denied rehabilitation, Patkar tells Counterview in an interview (part1*): *** Q: What is the latest position in your view as far as the Sardar Sarovar dam is concerned?

UK leader cites Indian farmers' struggle one of top global fights against neoliberal order

Counterview Desk  Jeremy Corbyn, member of the UK Parliament, former leader of the UK Labour Party and founder of the  Peace and Justice Project , in his  inaugural speech to the  Progressive International’s  Summit at the End of the World on May 12, 2022, has said, what is happening across globe suggests that "image of apocalypse -- bombs and raids, oil spills and wildfires, disease and contagion -- is a reality for people across the planet." In an adaptation of his speech, distributed by  Globetrotter , Corbyn, however, said, there are fresh examples action, too -- by Indian farmers forcing Prime Minister Narendra Modi to withdraw three neo-liberal laws;  by workers, communities and activists against the top giant multinational Amazon's "greed and exploitation"; and by Latin American people's struggle to say "no more to the domination by imperialism, the destruction of their communities and the abuse of their environments." Stating that this is n

Swami Vivekananda's views on caste and sexuality were 'painfully' regressive

By Bhaskar Sur* Swami Vivekananda now belongs more to the modern Hindu mythology than reality. It makes a daunting job to discover the real human being who knew unemployment, humiliation of losing a teaching job for 'incompetence', longed in vain for the bliss of a happy conjugal life only to suffer the consequent frustration.

Why is NIOH-ICMR 'official' making false claims on silicosis?: Health rights NGO

Counterview Desk In a letter to the Director General, Indian Council of Medical Research (ICMR), New Delhi, Dr Jagdish Parikh, trustee, health rights NGO People’s Training and Research Centre (PTRC), Vadodara, and Jagdish Patel, director, PTRC, have said that the claim being made for the use of biomarker for detection of silicosis raises concern about scientific tenacity of the diagnosis of the deadly occupational disease. The letter also objects to the reported claim by a top health official that it is possible to detect silicosis at the sub-radiological stage. It asks, “What is this subradiological stage of silicosis? We have not heard any such scientific term being used. Again, the report is using a term which is not found in any scientific literature so far. Is this term acceptable by ICMR? Is ICMR thinking of any explanation?” Text : This is with reference to our letter dated November 28, 2021. In our communication we had raised our concern about the scientific tena

Welfare? Govt of India spends just 19% of manual scavengers' rehabilitation budget

By Bharat Dogra*  While the Dalit community has been always known for higher levels of poverty as well as social discrimination, even within the Dalits there is a sub-section known for even worse levels of poverty as well as social discrimination. This is the section which was traditionally involved in manual scavenging. The shocking injustice they have suffered from over the years has been widely recognized leading to a ban on manual scavenging. At the same time there is urgent need for the rehabilitation of those engaged in manual scavenging. Hence a self-employment scheme for the rehabilitation of those engaged in manual scavenging was drawn up. The allocations and the expenditure for this scheme for the last eight years are shown in the Table below: Union Budget for Self-Employment Scheme for Rehabilitation of  Manual Scavengers (in Rs crore) By Budget Estimate we mean the original allocation made when the budget is presented. It is clear from this table that the actual expenditure