A US Supreme Court majority ruling may have stripped the World Bank of absolute immunity enjoyed by the top lending institute, overturning a 74-year-old presumption that international financial institutions could not be sued when their development projects hurt local communities.
However, reports International Consortium of Investigative Journalists (ICIJ), even as the US Supreme Court struck down the World Bank’s claims of blanket immunity, it did not resolve significant legal issues that will determine the outcome of the case being fought in a lower US court regarding the future of Kutch's "minority fishing community", adversely affected by the Tata Mundra Power plant in Gujarat.
The case concerns impact on the livelihood of Waghers, who had fished from makeshift settlements on the coastline of the Gulf of Kutch for about 200 years. The Tata Group received a loan from the World Bank’s private sector lending arm, the International Finance Corporation (IFC), to build a massive coal-fired power plant alongside the Wagher settlements, reporting that there were “no local fishing activities” in the waters near the plant.
"The project proceeded without counting the Waghers as a community that would be negatively affected by the plant and therefore entitled to compensation", ICIJ said, forcing a community representative, Ismail Jam, to approach a US court against the World Bank, which argued it enjoyed immunity from legal proceedings.
According to ICIJ, "Several years after the coal plant began operating, a study commissioned by a local fishing association found it was discharging hot, polluted runoff water into the Gulf of Kutch, driving fish away from the Waghers’ fishing grounds and depleting their already precarious livelihoods."
Quoting an an internal message to staff, ICIJ said, the World Bank vowed that it would not retreat from its development activities as the case played out in lower courts. “This ruling will not affect our ability to deliver for clients and partner countries,” the bank wrote.
ICIJ said, Chief Justice John Roberts, who authored the decision, wrote that it remained unclear which if any types of development loans counted as “commercial,” which is the category of activity by international organizations that are now subject to US lawsuits.
"He also ruled that a lawsuit based on wrongful actions that occurred outside the US may not have a sufficiently strong connection to the US, or to US-based commercial activities, to be admissible in U.S. courts", ICIJ added.
The case will return to a US district court in Washington DC and "it will likely take years until final decisions are reached" that could result in compensation for the community, said ICIJ, quoting Nadia Daar, director of the Washington DC office of Oxfam and an advocate for communities that bring claims against the bank.
According to Daar, real-world consequences are too often lost in discussions about policy.“We’re all here in Washington thinking about the global implications, but this all stems from one community in India that is still waiting to have their livelihoods restored."
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