The United States Supreme Court has revoked the legal immunity enjoyed by the World Bank, according to a report by the International Consortium of Investigative Journalists (ICIJ). In a 7-1 ruling, the Court rejected the Bank’s claims of complete legal immunity and ruled that one of the members in the Group, the International FInance Corporation (IFC) can be sued in relation to lending activities.
This February 27, 2019 ruling by the Court will open up the World Bank to lawsuits over development financing around the world.
Following this decision, the Bank now would have to defend itself against a suit by members of a fishing community in Mundra, India, who argue that their homes and livelihoods were damaged by pollution from a coal power plant that was financed by the Bank’s private sector lending arm, the IFC.
ICIJ quotes Bharat Patel, the General Secretary of the Association for the Struggle of Fisherworkers’ Rights, one of the plaintiffs who welcomed the historic ruling, saying: “This is a huge victory for the people of Mundra [and a] major step towards holding the World Bank accountable for the negative impacts their investments are causing.”
According to ICIJ the legal case surrounded a 1945 law which granted international organizations “the same immunity from suit” as foreign governments.
The report indicate that the court had to decide how that law was impacted by a second one from 1976 excluding commercial activities by foreign governments from this immunity.
The ruling does not reportedly affect either the United Nations or the International Monetary Fund, as they have complete immunity under their charters, it said.
The World Bank, however argued that the exclusion on the immunity of commercial activities did not apply to it. If it could be sued for its development loans, the bank maintained, it would become a target for lawsuits around the world that would cripple its ability to perform its core mission of fighting poverty and promoting development
The World Bank Group consists of the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA), and the International Centre for Settlement of Investment Disputes (ICSID).
The Bank Group is one of the world’s largest sources of funding for developing countries.
In fiscal year 2017, all the Group’s different organisations, IBRD, IDA, IFC, and MIGA collectively provided nearly $59 billion in loans, grants, equity investments, and guarantees to partner countries and private businesses—including to multiregional and global projects.
By Emmanuel K. Dogbevi
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