NPR: U.S. Supreme Court Rules That World Bank Can Be Sued
More suits could follow as international financial organizations grapple with this new standard of accountability for the unintended consequences of their investments.
The coal-fired Tata Mundra power plant in western India was funded by a branch of the World Bank. A group of farmers and fishermen is suing, claiming that contamination of local water sources has disrupted their livelihoods.
Sami Siva/International Consortium of Investigative Journalists
This story first appeared in NPR.
The World Bank can be sued when its overseas investments go awry. And so can some other international organizations.
That is the clear message from the U.S. Supreme Court, which last week issued a 7-1 decision in Jam v. International Finance Corporation, ruling for the first time that international financial institutions, including various branches of the bank and other U.S.-based organizations like the Inter-American Development Bank, can be subject to lawsuits in cases where their investments in foreign development projects are alleged to have caused harm to local communities.
The decision overturns a decades-old presumption dating to the founding of the World Bank in 1945 — that the IFC, a Washington, D.C.-based branch of the World Bank Group that finances private-sector projects in developing countries, and other bank-affiliated organizations are fully immune from such suits.
The Jam suit, which was filed in 2015, is far from over. With the fundamental immunity issue resolved, it will return to a federal circuit court in Washington, D.C., this spring for further battles over the facts of the case, and it may not be decided for years. In the meantime, at least one other major suit against the IFC is now gaining steam in response to last week's decision, and more could follow as international financial organizations grapple with this new standard of accountability for the unintended consequences of their investments.