July, 13, 2015, Washington, D.C. – The International Finance Corporation (IFC), the World Bank Group’s private lending arm, is claiming in court that it cannot be sued for enabling projects that destroy local communities’ health and livelihoods, no matter how much harm it has caused.
In April, fishing communities and farmers represented by EarthRights International (ERI) filed suit in Washington, D.C., against the IFC over the destruction of their livelihoods and property and threats to their health caused by the IFC-funded Tata Mundra coal-fired power plant in Gujarat, India. The IFC has now asked the federal court to dismiss the case based on its claim that it is entitled to “absolute immunity.”
The IFC provided a critical $450 million loan to the Tata Mundra project, enabling its construction and giving the IFC immense influence over project design and implementation, despite recognizing the significant risks it posed to local communities and their environment from the outset. The IFC also failed to take reasonable steps to prevent the harms it predicted and failed to ensure the project complied with the environmental and social conditions of IFC investments, according to the complaint.
The plant has already dramatically affected the lives of the people who live in its shadow. “It’s even worse this year,” says plaintiff Sidik Kasam Jam, a local fisherman who resides with his family at Kotadi bunder (fishing harbor) near the plant most of the year. “I don’t know what I will do if the fish catch doesn’t get better. I don’t know what the other residents of Kotadi will do. Worst case, our children will have to beg.”
Courts have found that the IFC is not immune from suit where the suit would further the IFC’s mission. That mission is to promote development while doing “no harm” to people and the environment. Ignoring this, the IFC told the court that its willingness to make loans would be deterred if it actually had to follow the laws of the countries in which it operates. And it described the claims of these plaintiffs, the very kind of people the IFC is chartered to help, as “interference.”
The IFC argues that it should not be accountable in court because the Compliance Advisor Ombudsman (CAO), the IFC’s internal accountability mechanism, “provides Plaintiffs with an alternative means of recourse.” But the plaintiffs already went through that process, according to Dr. Bharat Patel of Machimar Adhikar Sangharsh Sangatha (Association for the Struggle for Fisherworkers’ Rights), which is also a plaintiff in the case. "We tried to use CAO for redress. Despite CAO confirming our concerns, the IFC chose to ignore their findings.” While the CAO can make findings and recommendations, it has no enforcement authority. “Lives of the fishing communities are at stake,” Dr. Patel added. “We do not know where else to turn for relief."
“The IFC’s defense boils down to this: we are above the law,” said Richard Herz, ERI’s litigation coordinator and counsel for the plaintiffs. “It argues that it is entitled to act with impunity, contrary to its own mission and accountable to no one, even though the risks were so obvious from the start, and the IFC’s failure to act so devastating for precisely the people the IFC is supposed to help and protect.”
The case is Jam et al. v. IFC, No. 1:15-cv-00612, in the U.S. District Court for the District of Columbia. Briefing on the IFC’s motion to dismiss will conclude in October, after which the court will likely hold a hearing and decide the motion.