The US Supreme Court on Wednesday revived a lawsuit by villagers in India seeking to hold a Washington-based international financial institution responsible for environmental damage they blame on a power plant it financed.
The justices, in a 7-1 decision, overturned a lower court's ruling that the International Finance Corp (IFC), part of the World Bank Group, was categorically immune from such lawsuits under US law.
The IFC provided $450 million in loans in 2008 to help construct the coal-fired Tata Mundra Power Plant in Gujarat, India. IFC loans included provisions requiring that certain environmental standards are met. Lead plaintiff Budha Ismail Jam and other fisherman and farmers living near the plant sued in federal court in Washington in 2015, accusing the IFC of failing to meet its obligations.
In a decision written by conservative Chief Justice John Roberts, the high court ruled that there are limits to immunity for entities like the IFC under the 1945 International Organizations Immunity Act, just as there are for foreign countries under a 1976 law called the Foreign Sovereign Immunities Act.
Justice Stephen Breyer, a liberal, was the lone dissenter, saying that when the 1945 law was written, international organizations enjoyed broad immunity.
Justice Brett Kavanaugh, an appointee of President Donald Trump who joined the court last October, did not take part because he was involved in the case in his prior role as a federal appeals court judge.
The IFC had expressed concern that a ruling against the organization could invite similar lawsuits targeting it and other international development banks.
The villagers said the plant's construction and operations did not comply with the environmental plan set out for the project. The local environment has been devastated, according to the plaintiffs, with marine life killed by water discharges from the plant's cooling system and coal dust contaminating the air.
Lower US courts had ruled that the lawsuit was barred because the IFC was immune from such litigation under the 1945 law.
President Donald Trump's administration backed the plaintiffs, saying international organizations should not be given anything more than the limited immunity foreign countries are accorded.