First time any international financial institution has agreed to pay to end a lawsuit brought by an injured community.
WASHINGTON, D.C., October 3, 2024 – A U.S. court has approved a landmark settlement that brings to a close a class action lawsuit against the International Finance Corporation (IFC), the lending arm of the World Bank Group, alleging that it is liable for financing a notorious palm oil company’s violent land-grabbing campaign in Honduras. This is the first time any international financial institution has agreed to provide a remedy to end a lawsuit brought by an injured community.
EarthRights International presented the case, Juana Doe v. International Finance Corporation, in 2017 on behalf of campesino families in the Bajo Aguán Valley of Honduras. They allege that they were victimized by armed agents of Corporación Dinant, which terrorized local communities to expand its profitable palm oil operations. They also allege that the IFC, which financed Dinant’s expansion, knew or should have known that its money was abetting murder and other serious abuses.
“We, the families of the victims, are satisfied with the agreement. From the bottom of our hearts, we hope that armed violence will cease to be a tool in the areas around the world, where the institutions financed by the IFC defendants operate, so that this story of blood, death and pain will not be repeated,” said one of the victims.
Under the settlement agreement approved, the IFC will contribute funds to community support interventions, identified and selected by plaintiffs and class members and administered by EarthRights, for the benefit of the class members and others similarly affected in or from the region.
“The settlement is a testament to the tenacity of the Plaintiffs and their willingness to face personal risk over many years and significant odds against them, in order to hold an international financial institution accountable,” said Marissa Vahlsing, EarthRights U.S. Legal Director.
Doe v. International Finance Corporation (Case No. 17-1494) was argued before United States Magistrate Judge Sherry R. Fallon in the U.S. District Court for the District of Delaware. In addition to EarthRights, the plaintiffs were represented by attorneys Jonathan Kaufman and Judith Brown Chomsky and Jose Luis Fuentes.
The lawsuit follows EarthRights’ historic 2019 Supreme Court victory in Jam v. IFC, which held that World Bank Group entities are not entitled to absolute immunity in U.S. courts. The Jam case was the first lawsuit against the IFC brought by a community harmed by its lending; fishing and farming families from Gujarat, India, sued the IFC for its role in funding the disastrous Tata Mundra coal-fired power plant. The community harmed by Tata Mundra is still waiting for the IFC to provide a remedy.
In this case, as in Jam, the IFC’s internal monitor, the Office of the Compliance Advisor Ombudsman (CAO), found that the IFC violated its own rules. The CAO issued a scathing report on the Dinant loans in December 2013, noting that at least 40 killings targeting the Bajo Aguan Valley campesino movement had been linked to Dinant during 2010-2013.
Following the Supreme Court’s decision in Jam, an external review of the IFC and CAO ordered by the IFC’s Board recommended the IFC put in place a Remedy Framework that would ensure access to remedy for communities harmed by IFC projects. The IFC’s draft framework, however, has been widely criticized for dodging any responsibility and failing to make any concrete commitments to remedy or changes that would enhance accountability.
“The Doe v. IFC case shows what happens when an international financial institution fails to provide a remedy through any other avenue, leaving communities with no choice but to bring them to court,” said Michelle Harrison, EarthRights Deputy General Counsel. “IFC still has the chance to chart a new course as it finalizes its remedy policy, but should it refuse to get remedy right, this case will no doubt set a precedent for future action in the absence of any accountability by the IFC.”
Pursuant to the settlement agreement, the parties have issued a statement.
Media Contact:
Daniela Colaiacovo, Director of Communications, EarthRights International
daniela.colaiacovo@earthrights.org, (703) 975-0608
