U.S. Supreme Court takes up dispute over power plant in India

FILE PHOTO: Police officers stand in front of the U.S. Supreme Court in Washington, DC, U.S., January 19, 2018. REUTERS/Eric Thayer/File Photo

WASHINGTON (Reuters) - The U.S. Supreme Court on Monday agreed to consider reviving a lawsuit by Indian villagers seeking to hold a Washington-based international financial institution responsible for widespread environmental damage they blame on a power plant it financed.

The justices will hear an appeal by the villagers of a lower court ruling that the International Finance Corp was immune from such lawsuits under federal law. IFC, part of the World Bank Group, is an international institution with 184 member countries that helps secure financing for projects in developing nations.

The case revolves around the IFC’s decision in 2008 to provide $450 million in loans to help construct the coal-fired Tata Mundra Power Plant in Gujarat, India. IFC loans include provisions requiring that certain environmental standards are met.

The legal question before the justices is whether there are limits to immunity for entities like the IFC under the 1945 International Organizations Immunity Act, as there are for foreign countries under a 1976 law called the Foreign Sovereign Immunities Act.

Lead plaintiff Budha Ismail Jam and other fisherman and farmers who live near the plant sued in federal court in Washington in 2015, saying the IFC had failed to meet its obligations.

They said the plant’s construction and operations did no 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.

A district court in 2016 and the U.S. Court of Appeals for the District of Columbia Circuit in 2017 ruled that the lawsuit was barred because the IFC is immune from such litigation under the 1945 law.

The court will hear arguments and decide the case in its next term, which begins in October.

Reporting by Lawrence Hurley; Editing by Will Dunham