The International Finance Corporation’s settlement agreement is the first time any international financial institution has agreed to pay to end a lawsuit brought by an injured community.
WASHINGTON, D.C., December 6, 2023–A World Bank Group entity has agreed to a settlement with plaintiffs, including family members of seven murdered campesino farmers, to end a case alleging that it is liable for financing a notorious palm oil company’s violent land-grabbing campaign in Honduras. The settlement is pending court approval.
EarthRights International brought 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 International Finance Corporation (IFC), which financed Dinant’s expansion, knew or should have known that its money was abetting murder and other serious abuses. The IFC is the private corporate lending arm of the World Bank Group.
“Our clients took IFC to court in the United States because IFC gave them no other option,” said Marissa Vahlsing, a senior EarthRights attorney who represents the Plaintiffs. “Despite internal IFC findings of wrongdoing, IFC refused to provide them with a meaningful remedy. The IFC maintains that it is above the law, but it is not. This case shows that, unless and until the IFC provides meaningful remedies to the communities it harms, they will have no choice but to sue the IFC, as our clients bravely and tirelessly did here.”
IFC’s support to Dinant included direct loans and financing channeled through the IFC Asset Management Company, an IFC subsidiary that is also a defendant in the lawsuit. That support continued from 2008 through at least 2014, even as Dinant’s security forces plunged the Bajo Aguán Valley into violence.
Some of Dinant’s land-grabbing has been reversed in recent years by Honduran courts and other processes. However, the Bajo Aguán Valley remains a dangerous place for those advocating for campesino rights and fighting land-grabbing.
“No community has ever successfully sued an international financial institution before,” said American University law professor David Hunter, an expert on such institutions. “This is a monumental step for communities seeking accountability.”
The Juana Doe v. IFC 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. 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.
“Doe v. IFC shows us that communities have to sue the IFC to get remedy. It doesn’t have to be this way,” said Margaux Day, Policy Director at Accountability Counsel. “IFC has the opportunity – right now – to put in place a Remedy Framework that creates a pathway for communities to obtain meaningful remedies directly from IFC, without resorting to litigation.”
The settlement agreement does not immediately end the case. It provides for two settlement classes consisting of thousands of community members and must be approved by the federal court before the class settlement process can be completed.
Doe v. International Finance Corporation (Case No. 17-1494) sits 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 are represented by attorneys Jonathan Kaufman and Judith Brown Chomsky.
The plaintiffs themselves, who are proceeding under pseudonyms for their safety, will not be commenting directly on the settlement agreement beyond a statement agreed with the defendants. The agreed statement is as follows:
EarthRights International represents a group of anonymous plaintiffs from the Bajo Aguán region of Honduras. On behalf of those plaintiffs, EarthRights filed a putative class action lawsuit against the IFC Asset Management Corporation (AMC), a subsidiary of the International Finance Corporation (IFC) and IFC. The parties have reached an agreement to settle the matter, which is pending court approval. As part of the agreement, IFC will be dismissed outright from the suit and is only a party to the settlement on behalf of AMC. The Parties retain their respective litigation positions. Neither IFC, AMC, nor any affiliate or related parties admit to any breach, wrongdoing, or liability.
Under the settlement agreement, funds will be contributed to community support interventions which will be administered by an administrator, who is not a party to the litigation, in consultation with the plaintiffs and class members. The community support interventions are intended to benefit farmers’ cooperatives and residents of Panamá village as well as other people in and from the Bajo Aguán region of Honduras.
All Parties are satisfied with the agreement and are hopeful that this matter will resolve without further litigation.
Contact:
Kate Fried, EarthRights International
(202) 257.0057
kate.fried@earthrights.org
