Skip to main content

Tata Mundra: NGOs worry as US court rules World Bank can't be sued for 'damages'

By Kate Fried, Mir Jalal*

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. 
The court ruled that a lawsuit against IFC, for harms caused by IFC’s lending, is not based upon IFC’s lending. That is not right
“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.”

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.
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 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, 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. Just two weeks ago, on August 12, Tata Power announced that it would merge the Tata Mundra subsidiary into itself in order to deal with the plant’s debt problem.
---
*Kate Fried is with EarthRights International; Mir Jalal is with Centre for Financial Accountability. Click cenfa.org for more details

Comments

TRENDING

'Enough evidence' in Indian tradition to support legal basis for same-sex marriage

By Iyce Malhotra, Joseph Mathai, Sandeep Chachra*  The ongoing hearing in the Supreme Court on same-sex marriage provides space for much-needed conversations on issues that have hitherto remained “invisible” or engaged with patriarchal locker room humour. We must recognize that people with diverse sexualities and complex gender identities have faced discrimination, stigma and decades of oppression. Their issues have mainly remained buried in dominant social discourse, and many view them with deep insecurities.

Savarkar 'criminally betrayed' Netaji and his INA by siding with the British rulers

By Shamsul Islam* RSS-BJP rulers of India have been trying to show off as great fans of Netaji. But Indians must know what role ideological parents of today's RSS/BJP played against Netaji and Indian National Army (INA). The Hindu Mahasabha and RSS which always had prominent lawyers on their rolls made no attempt to defend the INA accused at Red Fort trials.

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".

Victim of communal violence, Christians in Manipur want Church leadership to speak up

By Fr Cedric Prakash SJ*  The first eleven days of May 2023 have, in many ways, been a defining period of Indian history! Plenty has happened in a rapid-fire stream of events. Ironically, each one of them are indicators of how crimes and the criminalisation of society has become the ‘new norm’; these include, the May Day rallies with a focus on the four labour codes which are patently against the rights of workers; the U S Commission on International Religious Freedom (USCIRF) released its Annual Report on 1 May stating that conditions for religious freedom in India “continued to worsen in 2022”; the continued protest by the Indian women wrestlers at Jantar Mantar for the expulsion of the chief of the Indian Wrestlers Federation on very serious allegations; the Elections in Karnataka on 10 May (with communalism and corruption as the mainstay); the release of the fake, derogative and insensitive film ‘The Kerala Story’; the release of World Free Press Index on 3 May which places India

Delhi HC rules in favour of retired Air Force officer 'overcharged' for Covid treatment

By Rosamma Thomas*  In a decision of May 22, 2023, the Delhi High Court ruled in favour of petitioner Group Captain Suresh Khanna who was under treatment at CK Birla Hospital, Gurugram, between April 28 and May 5, 2021, for a period of eight days, for Covid-19 pneumonia. The petitioner had to pay Rs 3,55,286 as treatment costs, but the Ex-Servicemen Contributory Health Scheme (ECHS) only reimbursed him for Rs 1,83,748, on the basis of government-approved rates. 

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.

Unlike other revolutionaries, Hindutva icon wrote 5 mercy petitions to British masters

By Shamsul Islam*  The Hindutva icon VD Savarkar of the RSS-BJP rulers of India submitted not one, two,or three but five mercy petitions to the British masters! Savarkarites argue: “There are no evidences to prove that Savarkar collaborated with the British for his release from jail. In fact, his appeal for release was a ruse. He was well aware of the political developments outside and wanted to be part of it. So he kept requesting for his release. But the British authorities did not trust him a bit” (YD Phadke, ‘A complex Hero’, "The Indian Expres"s, August 31, 2004)

India joining US sponsored trade pillar to hurt Indian farmers, 'promote' GM seeds, food

Counterview Desk  As many as 32 civil society organisations (CSOs), in a letter to Union Commerce Minister Piyush Goyal on the Indo-Pacific Economic Framework (IPEF) and India joining the trade pillar, have said that its provisions will allow the US to ensure a more favourable regulatory regime “for enhancing its exports of genetically modified (GM) seeds and GM food”, underlining, it will “significantly hurt the livelihoods of Indian farmers.”

Savarkar 'opposed' Bhagat Singh's, Netaji's dream of India, supported British war efforts

By Shamsul Islam* In a shocking development, the student wing of the RSS put the busts of martyrs Bhagat Singh and Subhash Chandra Bose with Savarkar's on one pedestal at the University of Delhi late in the night on August 20, 2019. Bhagat Singh sacrificed his life for a socialist-democratic-secular republic and Netaji raised Azad Hind Fauj (INA) consisting of people of all religions and regions for armed liberation of India.

Undermining law, breastfeeding? Businesses 'using' celebrities to promote baby food

By Rajiv Shah  A report prepared by the top child welfare NGO, Breastfeeding Promotion Network of India (BPNI), has identified as many as 15 offenders allegedly violating the Indian baby food law, the Infant Milk Substitutes Feeding Bottles, and Infant Foods (Regulation of Production, Supply and Distribution) Act 1992, and Amendment Act 2003 (IMS Act), stating, compliance with the law “seems to be dwindling by the day.”