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Sunday, July 14, 2024 | Back issues
Courthouse News Service Courthouse News Service

World Bank Member Averts Pollution Suit

(CN) - Fishermen in the coastal region of Gujarat, India, cannot sue the provider of $450 million used to build a power plant they say has destroyed their way of life, a federal judge ruled.

As explained in an opinion written by U.S. District Judge John Bates, the coal-fired Tata Mundra Power Plant was intended to supply much-needed power to the region and bolster India's economic growth.

Among those backing the initiative were the World Bank and the International Finance Corp., the latter of which provided $450 million to the project.

Recognizing that the construction would lead to possibly irreversible environmental and social risks, in 2005 the IFC developed an action plan for addressing or at least mitigating the impacts of the $4.14 billion project.

But fishermen and farmers who live and work near the plant say that plan afforded them little protection, and their "way of life [has been] fundamentally threatened or destroyed by the Tata Mundra Plant."

This prompted a federal complaint in Washington, D.C., last year by MASS, a local trade union for fisherworkers' rights; the government of a nearby village; and local fishermen and farmers led by Budha Ismail Jam.

The plaintiffs say the plant has severely damaged the marine ecosystem, with hot water from its cooling system depressing the fish catch near the shore, and the water intake channel polluting groundwater with saltwater, making irrigation and drinking impossible.

Plus, the plant's emissions have significantly degraded local air quality, and led local fishermen and farmers to seek residency elsewhere, according to the complaint.

The plaintiffs claim that if the International Finance Corp. had followed its own environmental policies, the plant would not have injured the ecosystem and people's health to such an extent.

According to the complaint, IFC's environmental accountability mechanism, Compliance Advisor Ombudsman, investigated, and found that the corporation had failed to adequately consider the risks of building the plant and "address [subsequent] compliance issues during [project] supervision."

The plaintiffs asked the D.C. Federal Court for injunctive relief or compensatory and punitive damages for the International Finance Corp.'s alleged negligence, negligent supervision, public and private nuisance, trespass, and breach of contract.

IFC, in turn, moved to dismiss under the International Organizations Immunities Act.

Judge Bates granted the lender's motion Thursday, tossing the plaintiffs' claim because they seek only to encourage "IFC's management to do what the IFC already requires."

"This court will not completely dismiss the possibility that a waiver could provide some incentive for IFC to adhere more scrupulously to its policies, over and above the pressure already applied by the CAO," Bates wrote. "But that marginal benefit must be weighed against the relevant costs which, in suits like this by these kinds of plaintiffs, remain quite substantial."

In the past, waiver has only applied in cases where the plaintiffs had a direct commercial relationship to the defendant international organization, unlike this case, the ruling states.

"Plaintiffs are a would-be class of fishermen and farmers, and two institutional plaintiffs that represent their interests-none of whom have a commercial relationship with IFC," Bates wrote. "Nor is this the type of suit for which waiver has previously been found."

The judge later added: "By focusing on IFC's internal decision-making processes, the suit invites - indeed, demands - 'judicial scrutiny of the [IFC's] discretion to select and administer its programs.' Waiver of immunity is highly unlikely in such circumstances." (Brackets in original).

Frank Vasquez Jr. of White & Case in Washington, one of IFC's attorneys, said he was pleased with the ruling, and that it was "in line with the D.C. Circuit precedent."

In a written statement, Rick Herz with Washington-based Earthrights International, an attorney for the plaintiff, said, "The IFC's sweeping claims of immunity are deeply problematic both from a policy perspective, and in light of recent Supreme Court case law."

"We feel confident that the appellate court will agree," he said.

Herz added that "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."

In the same written statement, Gajendrasinh Jadeja, the head of the village Navinal Panchayat, said "We are not discouraged.

"This is a fight for our lives and livelihood. We will continue our struggle for justice and we believe we will prevail," he said.

With 184 member countries, including the United States and India, International Finance Corp. reportedly invested nearly $18 billion, including more than $7 billion mobilized from other investors, in 2015.

The development of the Tata Mundra Power Plant was carried out by nonparty Coastal Gujarat Power Ltd., a subsidiary of Tata Power, an Indian power company whose website proclaims: "In harmony with nature."

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