When a project funded by the World Bank and other development banks harms local communities, where can they turn to? Unfortunately, there are few ways for affected people to hold the bank responsible for even the most dire human rights and environmental abuses. And in the US, these organizations have absolute legal immunity, meaning that they can’t be sued even in cases of explicitly illegal behavior.
But for the first time, the US Supreme Court will address international organizations’ immunity from harmful or illegal conduct. This case could pave the way for communities around the world to finally achieve meaningful relief from the damage international institutions leave behind.
And at the very least, this case poses a key question: Why should powerful international organizations like the International Finance Corporation (IFC) be entitled to “absolute” immunity from lawsuits—a protection that even governments don’t have?
The Case: Jam v. IFC
Indian fishing communities and farmers are challenging the IFC, a branch of the World Bank, for its role in the controversial Tata Mundra coal-fired power plant. The case is a stark example of the devastating effects development projects can have on communities when adequate safeguards and due diligence are not in place. In 2008, the IFC provided India with $450 million in loans to construct the Tata Mundra Power Plant, even though it recognized the high risk of the project to local communities and the environment. The plant destroyed vital sources of water for drinking and irrigation, contaminated crops, decimated fish populations that fishermen and residents rely on, and led to an increase in respiratory problems throughout surrounding communities.
When the IFC’s own independent accountability mechanism (the CAO) investigated the project, it decidedly denounced the bank’s failure to ensure that the project wouldn’t harm those it was ultimately meant to help. And yet, in response, the IFC largely rejected the CAO’s findings and failed to implement any plans that would remedy the harms to the communities.
But when local communities tried to sue the IFC in US federal court, the district court and the Court of Appeals for the DC Circuit both dismissed the case, arguing that the IFC had “absolute immunity” and could not be sued.
Represented by EarthRights International (ERI) and the Stanford Law School Supreme Court Litigation Clinic, these communities are pushing back against the IFC’s immunity in Jam v. IFC. The Supreme Court will now have to decide whether international organizations can still enjoy this special status above the law or if they can finally be held accountable for harmful actions.
“Absolute” Oddity
In the United States, the International Organizations Immunities Act (“IOIA”) dictates whether plaintiffs can sue the IFC and other international finance institutions. The law grants these organizations “the same immunity from suit and every form of judicial process as is enjoyed by foreign governments.” In other words, people should be able to sue the IFC under the same conditions in which they could sue a foreign government.
Foreign governments currently have “restrictive immunity” from lawsuits in the United States. This limits the kinds of lawsuits that someone can start against a foreign government, with some exceptions. People can still sue foreign governments for actions related to the government’s commercial activities when those actions took place in or had a direct effect on the United States.
However, due to a perplexing series of legal decisions, the IFC and other international finance institutions have a much more powerful “absolute” immunity from lawsuits — meaning they can’t be sued for any reason in the US.
Which begs the question: How is it that countries working together in an organization like the IFC can act with less accountability than if they acted individually?
Expanding Immunity
Other cases in the US are also considering absolute immunity. In Doe et al. v. IFC, Honduran farmers are suing the IFC Asset Management Company, LLC, (IFC-AMC) for their complicity in severe human rights abuses the farmers suffered at the hands of Dinant, a palm oil business.
Here the IFC approved a $30 million loan to Dinant despite the company’s campaign of terror against farmers asserting their land rights in the Bajo Aguan region of Honduras. Before and since obtaining the loan, the company has incited extreme violence against Honduran farmers, human rights defenders, and their lawyers.
Since November 2009, when the IFC disbursed the first half of the loan to Dinant, 100 farmers have been killed in Bajo Aguan. The plaintiffs in Doe et al. v. IFC include campesinos who have allegedly been shot, killed, tortured, and otherwise terrorized by Dinant and its operatives. Even though the violent actions by Dinant in Honduras were apparent, the IFC continued to disburse funding using IFC-AMC as a financial intermediary.
Ignoring the True Costs
Continuing to grant “absolute immunity” disregards the effects of World Bank Group projects and actions on local communities, the very people projects are supposed to benefit. To address this accountability gap, CIEL and our partners urged development finance institutions such as the IFC to stop claiming immunity in national courts in our 2016 Glass Half Full report.
The IFC is able to escape responsibility by ignoring calls from their own compliance mechanism to redress harms and by claiming absolute immunity in courts that have actual enforcement power. The IFC’s rigid adherence to this immunity only raises questions about whether they are truly evaluating projects in line with their stated goal of “helping to reduce poverty and improve people’s lives.”
We hope that the Supreme Court’s decision to hear the case points not only to a recognition of the communities devastated by one power plant in India, but to all the communities impacted by development projects around the world. Communities worldwide deserve recognition of their rights and, when needed, an option to achieve full remedy for harms, no matter who caused the harm in the first place.
By Carly Dooley, Legal Intern, and Marie Mekosh, Communications Associate
Originally posted on May 21, 2018
Cover photo by ICIJ Online via Flickr