IN YET another blow to the 1984 Bhopal gas tragedy survivors, an American court has ruled that it was Union Carbide India Ltd (UCIL) and not its parent company, Union Carbide Corporation (UCC), which was responsible for the generation and disposal of the hazardous waste that has contaminated the city’s soil and groundwater.
While delivering his judgment on 26 June, Judge John F Keenan found “no evidence indicating that UCIL manufactured pesticides on UCC’s behalf, entered into contracts or other business dealings on UCC’s behalf, or otherwise acted in UCC’s name”. According to him, UCC and UCIL were separate entities at “arm’s length” from each other and UCC exerted no control over UCIL.
Significantly, it was the same court that in May 1986 sent the case for compensation to the Indian courts. At that time, the Indian government, on behalf of the victims, had filed a suit for $3.3 billion as compensation arguing that since the disaster was a consequence of decisions taken by the parent corporation, an American court was the appropriate forum.
Aware of the massive compensation awarded in cases of corporate malfeasance by US courts, UCC argued that the case be sent to India. The US court presided over by Judge Keenan ruled in favour of UCC and sent the case to India. “The court is firmly convinced that the Indian legal system is in a far better position than the American courts to determine the cause of the tragic event and thereby fix liability,” he had said.
In the context of the judgment delivered on 26 June, it would be interesting to see how it matches up with the pronouncements of the “far better” placed Indian judiciary on the specific issue of liability of UCC vis-à-vis that of its Indian subsidiary.
It was the same US court that in May 1986 sent the case for compensation to the Indian courts
Following Judge Keenan’s 1986 order, the case for compensation was presented before the Bhopal District Court where Chief Judicial Magistrate MW Deo directed that “UCC will deposit in this court Rs 350 crore for payment of substantial interim compensation and welfare measures for the gas victims”. Significantly, he did not make any pronouncement against UCIL.
UCC appealed against this order before the Madhya Pradesh High Court where Justice SK Seth upheld Judge Deo’s directions to UCC but brought down the compensation amount to Rs 250 crore. Judge Seth justified his direction on the grounds that, “UCC owned more than half the stock of UCIL as well as controlled its board of directors and as such was a parent and holding company of UCIL under Indian law. Thus, it was in fact the defendant UCC that designed, constructed, owned, operated, managed and controlled the Bhopal plant through its Indian subsidiary.”
In response to UCC’s contention that it had no control over the running of the Bhopal plant, Judge Seth observed, “During 1978-84, certain vital decisions regarding the fate of the Bhopal plant, including those relating to its sale, lease or dismantling and shipment to a foreign country, were taken at different stages by the UCC management, sometimes even without reference to the Indian company, indicating complete control of the defendant UCC over the affairs of the Indian company.”
UCC appealed against Justice Seth’s order in the Supreme Court and it eventually led to a collusive settlement in February 1989 for $470 million. The court directed that the bulk of the amount — $425 million — was to come from UCC and the rest from its Indian subsidiary. In October 1991, the order was modified and criminal charges against UCC and its officials and subsidiaries were reinstated. When UCC continued to abscond from Indian courts, in April 1992, Chief Judicial Magistrate Gulab Sharma directed that “movable and immovable properties of UCC located in India be attached”.
In June 2010, Chief Judicial Magistrate Mohan P Tiwari, in his judgment in the criminal case against UCIL and its officials, remarked, “The tragedy was caused by the synergy of the very worst of American and Indian cultures. An American corporation cynically used a third world country to escape from the increasingly strict safety standards imposed at home.”
Reportedly, Union Law Minister Salman Khurshid has refused to comment on Judge Keenan’s verdict absolving UCC of its liabilities. The least he could do is point out that between the 1986 and 2012 judgments, only one could be right.