For over a decade, Budha Ismail Jam, Sidik Kasam Jam, Ranubha Jadeja, and Kashubhai Abhrambhai Manjalia have fought for the International Finance Corporation (IFC) to compensate their community for the environmental devastation caused by a coal-fired power plant that the IFC financed. Rather than taking responsibility for its actions, the IFC insists that it is immune, leaving the community to suffer.
Their search for justice continues as the communities recently submitted a petition to the U.S. Supreme Court, asking it to find that the IFC is not entitled to immunity in this case. Here are three reasons why the court should hear the case.
1. Communities deserve justice.
As the private-lending arm of the World Bank Group, the IFC funds private-sector development projects with a goal of ending poverty. The IFC’s mandate is to ‘do no harm’ to people and the environment.
In 2008, the IFC provided $450 million to help construct the Tata Mundra Ultra Mega coal-fired power plant in Gujarat, India. The IFC was well aware that rather than doing no harm, this plant, like other coal-fired power plants, would do immense, irreversible harm to people and the environment. So when the IFC chose to support the project, it labeled it “high risk” because building a coal power plant in this community’s backyard was almost certain to have a negative environmental impact.
Just as the IFC predicted, the plant caused widespread environmental and social devastation to communities living in its shadows. The plant spews airborne toxins, discharges heated water into the ocean, and leaks saltwater into the communities’ freshwater supply. Local fishermen’s catch decreased dramatically, while farmers in the village of Navinal saw their crops destroyed by ash. Community members in the surrounding villages now have serious health issues, particularly the children. And, as is typical in such environmental justice (or, more accurately, injustice) cases, local communities have not benefited from the so-called economic development from the plant.
Every day the plant operates is another day that these communities suffer. What is the legal system for, if not to protect vulnerable groups from powerful actors who violate the law? The Supreme Court should take up this case to deliver justice to these communities.
2. IFC is not above the law.
The IFC has stonewalled the community at every turn, not because it was innocent,, but rather because it believes that it cannot be held accountable for the harms it has caused.
When community members raised these issues with the IFC, they got nowhere. The IFC’s internal Ombudsman recognized that the IFC had made multiple mistakes in funding the project, and the IFC had the chance to mitigate the harms from the plant. Instead, the IFC ignored the Ombudsman’s recommendations.
But the communities persisted. They sued the IFC in Washington D.C., its home forum, and asked U.S. courts to hold the IFC responsible for their injuries. But the IFC argued that it could never be held accountable in U.S. courts because it had immunity as an international organization.
While the plant continued to spew deadly pollution into their community, community members were forced to drag the IFC to the Supreme Court. It took nearly four years, but they won a historic victory in 2018 when the Supreme Court ruled that the IFC was not absolutely immune in a landmark court case.
After the Supreme Court’s decision, the IFC had a third chance to make things right. But ignoring its mandate to ‘do no harm’, the IFC once again argued that it was immune because of a legal technicality. Plaintiffs are now back at the Supreme Court, debating whether the IFC is above the law.
Plaintiffs believe that the law is on their side. But the real story here is the fact that the IFC, with enormous money and power and a mandate to promote international development, would drag these plaintiffs through a decade of litigation, all to avoid taking responsibility for harms that it knew their loans would cause. After all, no one contests that the communities have been harmed by the power plant, or that the IFC funded the plant, or that the IFC could help the plaintiffs if it wanted to.
The IFC should stop hiding behind immunity to deny remedy to members of the very community it has a mandate to help. But because it won’t, the Supreme Court should intervene to hold it accountable.
3. Sovereign companies can’t be allowed to harm ordinary Americans.
Because it receives so many petitions, the Supreme Court can’t hear every single case. In fact, the Court only hears less than 1 percent of the petitions before it. So even though this case involves serious harm and impunity for a powerful international actor, the Supreme Court normally wants more. But because this decision will have immense impacts on cases against any sovereign, the Supreme Court should step in to declare that such a broad immunity rule should not apply.
The Supreme Court previously ruled that the IFC was entitled to only the “limited” immunity that foreign governments get in U.S. courts. So when the case went back to the district court, the judge applied the Foreign Sovereign Immunities Act (FSIA). The FSIA is a statute which defines when foreign countries, including companies owned by foreign countries, can be sued in the U.S. Because the court applied the FSIA, its decision will apply to all foreign countries, not just the IFC. This is a key point, because foreign countries are powerful economic and political actors, and their commercial activities affect everyday Americans.
Take airlines, for instance. Some of the most notorious plane crashes in American history have taken place on state-owned or operated aircraft. In 1999, 217 people died when an airplane operated by a subsidiary of the Egyptian government crashed off of the coast of Nantucket. Their loved ones sued Egypt in U.S. courts.
Another example close to home is the case of defective Chinese drywall. 10,000 Americans installed it in their homes after Hurricanes Rita and Katrina, only to later discover it made them sick. They brought claims against a number of Chinese manufacturers, including one owned by the Chinese government.
Just because a company is owned by a foreign government, does not mean it is above accountability when it causes harm. So Congress passed the FSIA to make sure that when sovereigns act like a business, they are treated like a business. But unless the Supreme Court reverses the D.C. Circuit’s decision, these foreign state-owned companies could harm Americans, and there is nothing U.S. courts could do about it.
This decision is not only crucial to Budha Ismail Jam, Sidik Kasam Jam, Ranubha Jadeja, Kashubhai Abhrambhai Manjalia, and their communities but will harm anyone who might be injured by sovereign conduct. It cannot be allowed to stand.
