Fri, Apr 01, 2016 - Page 9 News List

World Bank lending arm sees off lawsuit by Indian fishermen

A US judge has ruled that the IFC cannot be sued over a US$450m loan for a power plant that the plaintiffs maintained had destroyed their livelihoods

By Claire Provost and Matt Kennard  /  The Guardian

Illustration: Mountain People

A judge in the US capital has ruled that the World Bank cannot be sued in a case brought by Indian fishermen and farmers who said that an investment by the bank’s private sector arm in a giant coal-fired power plant had “destroyed their livelihoods.”

In 2008, the International Financial Corp (IFC) branch of the bank announced a US$450 million loan for a subsidiary of the Tata Group conglomerate to build the power plant in Gujarat, billed as an essential project to help fuel India’s ongoing economic development.

However, according to the plaintiffs in the civil action, filed last year, the project has severely damaged the local environment and the traditional ways of life of those who now live in the shadow of the plant. Their lawsuit marked the first time a local community had sued the IFC in the US courts.

Last week, US District Judge John Bates dismissed the case — filed in a federal court in Washington, where the bank is headquartered — accepting the IFC’s argument that it is immune from the suit.

The court’s ruling on Thursday last week deferred to earlier decisions from the Washington circuit court of appeals on the immunity of international organizations, which it said it cannot overturn.

“Because the court agrees that IFC is immune from this suit, it will dismiss plaintiffs’ complaint in its entirety,” the ruling said.

The decision is likely to inflame critics of the World Bank, who say it is almost impossible to hold the organization to account.

“The IFC thinks it is entitled to act with impunity, contrary to its own mission, and accountable to no one. Our clients disagree, and the law is on their side,” said Rick Herz, litigation coordinator at EarthRights International, an environmental and human rights non-governmental organization (NGO) that has supported the fishermen and farmers in their claim.

EarthRights said the plaintiffs intend to appeal the court’s ruling. Recent US Supreme Court cases have overturned the Washington circuit court of appeals’ rulings regarding the immunity of international organizations, it added.

“We are very disappointed by the court’s decision ... and are hopeful that the appellate court will take the right decision and ensure that the IFC is accountable for its actions,” said Luiz Vieira, coordinator of the Bretton Woods Project NGO in London, which monitors the World Bank. “Given the well-documented negative consequences of IFC’s investment in this case, one would have hoped that the IFC would elect to waive its immunity and thus allow the communities the justice and recourse they have been denied to date.”

The project at the center of this case, the Tata Mundra power plant, was developed by Coastal Gujarat Power Ltd (CGPL), a subsidiary of Tata Power. IFC loaned CGPL US$450 million for the development of the plant.

The plaintiffs in the civil action included a local trade union and the leaders of a nearby village. They said the plant had damaged the local marine environment, causing fish to move further away from the coast, and damaged local water supplies used for drinking and to irrigate farmers’ fields.

“The Indian government’s motto is all about industrial development, but traditional communities — like fishermen and farmers — are going into poverty because of the IFC,” said Bharat Patel, head of the Association for the Struggle for Fishworkers’ Rights in the Kutch area of Gujarat, where the Tata power plant was built.

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