The US government has backed a case against the International Finance Corporation’s investments in Tata Power’s 4,620 MW Mundra plant. The Trump administration has urged the US Supreme Court to overturn a lower court decision, which had held that international organisations, such as the World Bank, of which the IFC is a part, are entitled to “absolute immunity” from lawsuits in US courts.
The case being heard by the US Supreme Court dates back to 2015, when fishing communities in Gujarat, under the banner of the Machimar Adhikaar Sangharsh Sangathan (MASS – Association for the Struggle for Fisherworkers’ Rights), dragged the IFC to court for investing in the Mundra plant, which they claimed was causing environmental damage.
IFC had loaned Tata Power $450 million for construction of the imported coal-based Mundra power plant in 2008. Since 2011, IFC has been in dispute with local fisherfolk over the alleged environmental damage caused by the plant. Lower courts in the US had dismissed the case after IFC argued that it had immunity under the 1945 International Organisations Immunities Act (IOIA).
Now, the US government has argued that international organisations should only be entitled to the same “restrictive” immunity that foreign governments have, and like the latter, should be subject to suit for injuries arising out of their commercial activities.
“We are pleased that the (US) government has weighed in against absolute immunity,” said Rick Herz of EarthRights International (ERI), one of the attorneys who represents the plaintiffs in the case. “We are optimistic that the Court will use this opportunity to clarify that the law must be read to mean what it says: international organisations are entitled only to the same immunity as foreign governments.”
If the Supreme Court rules in the plaintiff’s favour, this case may pave the way for communities harmed by the actions of IFC and other multilateral organisations to seek legal remedies often denied to them.
According to Bharat Patel, General Secretary, MASS, since 2013 both IFC and Tata Power’s Coastal Gujarat Power Limited (CGPL Mundra) are working on the implementation of an ‘action plan’ to further investigate the issues and concerns raised by the communities and implement appropriate remedial measures but there is no work happening on the ground.
Tata Power declined to comment for this story.