Jam v. IFC: One year after the historic Supreme Court victory

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Indian farmers and fishworkers continue the fight for justice in Jam v. IFC one year later 

A little more than a year ago, EarthRights won a historic victory at the U.S. Supreme Court on behalf of our clients in Jam v. International Finance Corporation (Jam v. IFC), in which we are suing the World Bank Group for the harms from a disastrous coal-fired power plant project in India. The Supreme Court ruled that the IFC – the arm of the World Bank that lends to private corporations – was not absolutely immune from liability in U.S. courts. The story does not end there, however. Our clients, farmers and fishworkers whose lives and livelihoods have been devastated by the power plant, have a long way to go to achieve justice.

What the Supreme Court decision means

What the Supreme Court ruled was that the IFC was entitled to only the “limited” immunity that foreign governments get in U.S. courts. (Wonky legal note: they’re not even entitled to this if they have waived immunity, which we think they have.) But that’s not nothing – it still provides immunity in most cases, unless an exception applies.

The main exception relevant here is known as the “commercial activity exception,” although it’s probably more accurate to call it the “U.S. commercial activity exception.” It means that the IFC, like foreign governments, can be sued when it carries on commercial activity in the United States, just like a private business.

Back to court 

After the Supreme Court win, we had to go back to court to argue about this exception. IFC argued that its lending was not “commercial activity,” and that the case was not centered in the United States, because the plaintiffs were injured by the power plant in India. We argued that IFC’s lending was like a private bank’s lending, so it was obviously commercial. And because the IFC’s lending decisions are made in Washington, D.C., it qualifies as U.S. commercial activity.

The federal district court judge made his ruling about a month ago–and he disagreed with both parties. What was important, he said, was not where the IFC made its lending decisions, or where the plaintiffs were injured. Instead, it was where the IFC’s activity in monitoring and supervising the power plant project took place. Based on the allegation of our complaint and the evidence submitted by IFC, he concluded that the activity took place in India. He dismissed our case again.

We disagree with this interpretation of the law, but we also think we have evidence that will satisfy the judge. We spent most of the past month conducting an intensive fact-finding exercise, and we believe that virtually all of the IFC’s actions and decisions relating to the power plant were made here in D.C.

What’s next for the case

 Last week, we put that new evidence before the court, arguing that it’s enough to meet the test. We’re now waiting for a ruling.

Either way, there will probably be an appeal. Even if we win this stage, the IFC has a right to appeal determinations of its immunity.

Of course, while this litigation continues, IFC is also continuing to make substantial changes to its environmental and social governance systems – and we think that our lawsuit has a lot to do with that.

Unfortunately, the negative impacts of the power plant continue to affect our clients. Superheated water discharged from the plant’s cooling system harm the fisheries; the cooling water channel pollutes local water supplies with seawater; and ash and dust coat local crops and lungs. The plant remains an economic debacle as well; the plant’s economic viability was based on access to cheaper coal from Indonesia. When those coal prices rose, the power plant could not turn a profit. Now, at a time when solar and wind projects are proliferating because they are cheaper than coal, the power plant’s owners are threatening to shut it down if they are not allowed to raise their prices.

In addition to the operation’s lack of profitability, the devastating harms to the local economy, the health of local communities, and the environment will be long-lasting and extremely costly to remedy. The owners of the power plant and those who were involved in the financing of the project are not the ones shouldering these costs, instead that burden is on local communities. If those responsible actually had to bear the brunt of those costs to local communities, perhaps the power plant would never have been built at all. 

 

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