November 8, 2020

Local farmers in India’s Gujarat have fought back against the economic monopoly of the World Bank by finally convincing the US Supreme Court to hear their case against the World Bank’s  financial lending arm.  In an unprecedented move the U.S. Supreme Court ruled in favour of the plaintiffs to hear a case against the World Bank’s  lending arm (International Finance Corporation).

This means that the IFC’s claim to absolute immunity from lawsuits has been overturned, opening the door to litigation against them in relation to their economic activities.

The affected farmers  originally sought redress through the IFC’s independent accountability mechanism, the Compliance Advisor/Ombudsman (CAO). While the CAO  did in fact find a number of counts of non-compliance, the IFC largely dismissed their findings, forcing the plaintiffs to seek redress at a higher authority.

Fishermen & farmers welcomed the U.S. Supreme Court decision to hear their lawsuit. In a limited but still significant step, the World Bank is being held accountable for the extensive damage caused by the Tata Group’s Mundra Power Plant in Gujarat, which the World Bank financed. 

In 2008 , the IFC provided $450 million in loans which were used for the Tata Power coal-fired plant in Mundra, Gujarat. Although the IFC has loan provisions which require strict environmental requirements, the power plant in receipt of these loans has had a “devastating and irreversible impact” on the coastal ecosystem. 

Villagers  and farmers affected, who live near the 4,000 megawatt plant have cited  coal ash damages to their crops, and severe contamination of their water supplies used for both drinking & irrigation. In addition to this, the discharges from Tata Power plant’s cooling systems have devastated the local fish stocks.   

The power plant is being citied as the driving force behind the considerable damage to the environment and consequently the livelihoods of the local farmers. While a lower court ruling held that the International Finance Corp (IFC) was immune from such lawsuits under federal law, the U.S. Supreme Court has nevertheless agreed to hear out an appeal by the farmers. 

The plaintiffs are being represented by the advocacy group Earth Rights International in this historic response from the U.S. Supreme Court. 

This ruling is a big victory for accountability. This is especially so because the plaintiffs have fought for several years to have their case heard against the IFC’s negligence in its duty of care. 

In this bold step forward for justice, international organisations no longer have the absolute immunity they once did.