Struggle for IFC accountability for Tata Mundra continues despite landmark immunity ruling

6 October 2020

A US federal court ruled on 24 August that the World Bank Group cannot be sued for damages caused by its lending to the Indian Tata Mundra coal power plant. Following the February ruling by the US Supreme Court that international financial institutions such as the World Bank can be sued for their “commercial activities” in the United States, and do not have absolute immunity from suit (see Observer Spring 2019), the district court considered whether the plaintiffs’ claims in the Tata Mundra case satisfied this exception to immunity.

According to a summary of the latest decision by US-based NGO EarthRights International, which represents the plaintiffs of affected fisherfolk communities who have been seeking justice since 2011, the federal court found that, “the IFC is immune under the facts of this case”, finding that it is not “based upon a commercial activity carried out in the U.S.”  EarthRights International announced on 25 August that the affected communities will appeal the decision, noting that it will do so,“on grounds that IFC’s tortious acts were committed in the United States.”

Richard Herz, senior litigation attorney at EarthRights, noted in its announcement of the decision that, “the court ruled that a lawsuit against IFC, for harms caused by IFC’s lending, is not based upon IFC’s lending”, adding, “that is not right. The same law applies to foreign governments and their corporations, so this would mean that a Chinese state-owned bank that profits from causing harm to Americans in the United States cannot be sued here either.”

Civil society groups have long claimed that IFC’s attempts to seek immunity from prosecution amount to an effort to escape responsibility for the harms caused by its lending (see Observer Spring 2016, Summer 2014).