J 2006 PL March 13 18010126236 Symlawacin 20201003 142002 1 7

SCC Online Web Edition, Copyright © 2020
Page 1 Saturday, October 03, 2020

Printed For: arghya chakraborty, Symbiosis Law School
SCC Online Web Edition: http://www.scconline.com
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(2006) PL March 13
Lessons from Bhopal: The Elusive Quest for Justice and Accountability
LESSONS FROM BHOPAL: THE ELUSIVE QUEST FOR JUSTICE AND ACCOUNTABILITY
by
Pooja Gautam*
“I weigh my words when I say that in my judgment, the limited liability
corporation is the greatest single discovery of modern times….”
—Nicolas Murray
In fact, the simile would appear well founded if we say that the MNC stands in
splendid array beside God. As creator — of products and technology and symbolising
enterprise ubiquitous, assuming a variety of forms, omnipotent, with decisive control
over people and States. As an entity that can skip lightly through borders and
boundaries, the MNC has the power, too, to traipse away when its misdeeds catch up
with it. The elusive MNC is, then, often not amenable to national courts and
jurisdictions — not when it wishes to escape.
The Disaster: Hiroshima of chemical industry
Late on Sunday evening, 2-12-1984 during maintenance a small leak at 11.00 p.m.
occurred from methyl-iso-cyanide (MIC) storage tank 610. Workers noticed it but
thought it to be a normal and small leak, source of which could not be located. The
sting of MIC was getting stronger and the temperature and pressure were rapidly
rising in the tank. At around 12.30 a gigantic hiss came out — a runaway chemical
chain reaction, triggered by the entrance of water, which entered one of the storage
tanks containing 60 tons of MIC, triggering off a runaway reaction and creating
tremendous heat and pressure in the MIC plant.
Forty tons of deadly gases burst past the ruptured disc, overwhelmed the plant's
safety systems, and shot into the atmosphere. A deadly cocktail of MIC and other
chemicals such as hydrogen cyanide and phosgene was carried by the northerly wind
to the neighbouring communities. People woke up with invisible clouds of poisonous
gas, stinging eyes and burning throats. The suffocating gas invaded lungs and created
enormous fluids inundating the lives with their own body fluids. The precise number of
deaths still remains a mystery. It is said that 2,00,000 were injured and 30,000 to
50,000 were too ill to ever return to their jobs.1
Bhopal gas tragedy is described as another “Hiroshima of the Chemical Industry”,
one of the worst commercial industrial disasters in history, while Krishna Iyer
preferred to call it Bhoposhima2 — a major disaster killing thousands of people as a
consequence of corporate delinquency.
Page: 14
The fact sheet of the Union Carbide Corporation3

While saving money the Union Carbide Corporation (UCC) and UCIL were negligent
in maintenance of the MIC plant and in fact it later came to light that there was a
substantial reduction even in the number of trained personnel.
Considering the negligence aspect it is important to note that according to sound
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and established legal principles, even a manifest fault by a local subsidiary would be
put at the doorstep of a multinational. This is based on the premise that power and
knowledge create a legal duty. And this duty, which has an absolute and non-
delegable character emanates from the unity of power and knowledge. This duty is
twofold.
1. It is the duty of the multinational to itself to keep informed and know. Such a
duty cannot be, by definition be delegable.
2. Second, it is a duty of the same nature to employ normal care and prudence to
know the possibility of an emergence of likely hazards and danger. This duty too
is non-delegable.
After thousands succumbed to Carbide's poisonous gases, the Company went into
denial mode. First, it held out MIC to be a mild gas (in the nature of tear gas), which
would do no more than raise a few tears. Subsequently, it maintained that the gas's
effects would be localised and not systemic — a claim that has since been debunked
based on evidence of widespread systemic disorders among affected populations.
There has been no prosecution, or civil sanction, for the misinformation given out by
the Corporation4 .
Carbide, and its new owner Dow Chemical5 , have refused to share knowledge on the
toxicology and effects of the poisonous gases acquired in the course of product
research. Such information is vital for the proper treatment of the victims. There have
been no sanctions visited on UCC for this criminal withholding of information. Rather
than clean up contamination caused by its activities, ameliorate human suffering
among its victims and assume responsibility for the destruction, the Company
retreated into a well of silence or engaged in aggressive denial and blatant lying.
Summary of the case as of now
Union Carbide's operations in India being conducted through a subsidiary, Union
Carbide India Ltd. (UCIL) where the parent US Company (UCC) held 50.9 % of UCIL
stock, the balance of 49.1% being owned by various Indian investors, it is the
abovementioned twofold duty of UCC which makes it liable to a number of innocent
victims who fell prey to UCC's gross negligence6 .
The Union of India filed a case against UCC in the US District Court. The US courts
returned the case to India arguing that India has a robust legal infrastructure (forum
non conveniens), and instructing Carbide to cooperate with the Indian authorities.
The Indian District Court in Bhopal and the High Court allowed concerns of the
survival of the victims to dominate the early stages of the proceedings, and ordered
interim compensation to be paid by UCC. UCC appealed these orders. The Supreme
Court, in a settlement order which has cast its own shadow of doubt, endorsed a
settlement arrived at between the Indian State and UCC, by which UCC/UCIL would
pay US $475 million. In return, all cases, civil and criminal, would
Page: 15
stand closed against UCC. Because the compensation amount would be held by the
Union of India, all further claims against UCC would have to be made to the Union of
India.7 However, the court's revocation, it clarified, was not because it did not have
the power to “settle” criminal cases, but because it seemed that reinstating the
criminal charges was in the “public interest”.
The criminal trials recommenced. The pursuit of impunity led some of the accused
all the way to the Supreme Court to have the charges dropped. The Supreme Court
acquiesced in part and, in 1996, diluted the charges against the Indian accused. And
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the shares that had been under attachment because UCC which was an absconder was
allowed by the court to be sold on the specious plea that it would better serve being
spent on constructing a hospital for the treatment of the victims — the dishonesty of
which enterprise is yet another tale8 .
UCC and its Chairman, both of whom had treated the court to contemptuous
neglect, continue to have grave charges hanging over them. Union Carbide has failed
to honour summons issued by the Indian courts and has been proclaimed an
absconder since 1992.
If the Indian Supreme Court had let the case come to judgment, the US courts
would have had to enforce it against UCC within the US. The Supreme Court's
uncertainty that its judgment may not be able to pass the test of “due process”
reappears throughout its judgment when it reviewed the settlement order. This fear
that a US court may find the Indian process wanting, despite the praise heaped on the
Indian judicial system in the forum non conveniens9 proceedings is revealing of the
complexes under which a post-colonial country that has adopted the “developing” tag
reels.
The shameful Bhopal Settlement
However, the Supreme Court has recently ordered the Federal Government to
distribute money in the bank to more than half a million victims of the 1984 chemical
tragedy that left more than 3500 people dead and thousands crippled for life. The
court ordered $325 million to be paid to more than 566,000 survivors and dependents,
who still had not received compensation even 20 years after methyl iso-cyanide gas
began leaking from the Union Carbide Corporation.10
Legal delays, including identifying some of the victims, held up payment of the full
amount. After the initial relief was paid out, the Supreme Court directed the
Government to hold the balance of the money in India's Central Bank. That fund has
earned interest and increased the value of the original deposit. Despite the Indian
rupee value of the compensation having risen significantly, the compensation ordered
now amounts to a little more than $600 a person.
The campaigners are demanding higher compensation for the victims. According to
the $470 million settlement between the Government of India and Union Carbide,
there were only 105,000 victims to be compensated. However, the latest court order
has recognised over 570,000 claimants who have to be paid compensation. Since the
court has accepted that the scale of the tragedy was five times more than what the
1989 estimates held, therefore, the amount of compensation should also be increased
five times.
Page: 16
And the wounds never heal….

The polluted site of the abandoned Union Carbide factory is still said to be poisoning
the groundwater of the area. The Indian Government continues to pursue criminal
charges against the former Union Carbide Chairman, Warren Anderson. Newspapers
have reported that the United States has rejected India's request to extradite
Anderson, who has retired and lives in New York.
Three survivors’ organisations and two support groups filed the class action suit
seeking damages for violations of international human rights law and environmental
contamination. The groups — Bhopal Gas Peedit Mahila Udyog Sangathan, Gas Peedit
Nirashrit Pension Bhogi Sangharsh Morcha, Bhopal Gas Peedit Mahila Stationery
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Karmachari Sangh, Bhopal Gas Peedit Sangharsh Sahayog Samiti and Bhopal Group
for Information and Action filed the case on behalf of the victims of the gas leakage.
But Judge Keenan dismissed the case in August 2000, holding that Union Carbide had
no more liabilities in the case since the Indian Supreme Court had worked out a
settlement in 1989.11
The Bhopal bodies filed an appeal at the US Second Circuit Court of Appeals. The
survivors’ organisations contended that the 1989 settlement, under which Union
Carbide paid US $470 million as compensation, did not deal with health hazards
caused by soil and water contamination. The court partly upheld Judge Keenan's ruling
but directed claims under seven counts regarding groundwater and soil contamination
and health hazards to him for reconsideration. Yet the Bhopal bodies believed that the
court has not addressed the concerns expressed by the plaintiffs about soil and
groundwater contamination in and around the plant in Bhopal and that the judgment
does injustice to the victims of the Bhopal gas leakage.
Interestingly, the court also held that the statute of limitations had expired for the
plaintiffs — a point that was challenged by the New York-based attorney for the
plaintiffs’ organisations, Himanshu Rajan Sharma. “In fact, under the New York law,
the plaintiffs’ claims for damages as a result of environmental contamination cannot
be time-barred because the injuries are continuous or ongoing in nature.” The
plaintiffs maintained that Union Carbide and Anderson were fugitives from the legal
jurisdiction of the Bhopal District Court where criminal charges were still pending
against them.
The Solution
Corporate criminal liability
Indian law recognises what is termed as an “absolute offence”. According to the
Supreme Court in J.K. Industries Ltd. v. Chief Inspector of Factories and Boilers12
absolute offences “are not criminal offences in any real sense but acts which are
prohibited in the interest of welfare of the public and the prohibition is backed by
sanction of penalty”. Absolute offences face the “strict liability” regime, where the fact
that a situation existed or an event occurred is sufficient to constitute the offence.
Labour and industry legislation, food adulteration and pollution are illustrative.
But unfortunately, criminal law has steered clear of corporate crime. More basic still,
it is yet to learn to contend with the corporation as an offender. While it may be an
axiom in traditional criminal law that it is a person who commits crime and that
principle has survived all the way to the Rome Statute for an ICC (1998), corporate
criminality has demonstrated, time and again, that the crime may be committed by
the leaders of a corporation as much as by the corporation itself. It is the corporation
as an entity, as also the individuals who share its power that may commit the
Page: 17
crime. Yet, in all these years, the corporation has been above the law by the simple
device of not being squarely in it, even if Section 305 of the Criminal Procedure Code
does speak of a “procedure when corporation or registered society is an accused”.
A corporation may commit a crime, but it will remain beyond the bounds of IPC for
serious crimes because IPC prescribes 3 kinds of punishments: imprisonment, fine and
death penalty. Where lesser crimes may be punishable with fine alone, IPC does not
allow that for offences of gravity. In such cases, imprisonment is mandatory.
Imprisonment of a corporation is not literally possible. This would have us believe,
there is a lacuna in the law, which can be remedied by Parliament alone13 .
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But if imprisonment means drawing a convicted offender into a preset confined
space as a prison, it is arguable that an offending corporation cannot be imprisoned.
But, the constituents of imprisonment include detention, restriction of certain liberties
and, more recently, it has been held to be about productive work while in prison the
wages for which would go to repair the victims’ lives. These are certainly capable of
being imposed on a corporation. The notion of imprisonment clearly needs to be
revisited. So too do other possibilities of sentencing of a convicted corporation.
Ethical consumerism … or is it?
Ideally Governments should hold corporations accountable through “strong internal
regulations backed by strong international law and enforcement institutions”.
However, transnationalisation of investment has not been matched by transnational
regulation. Globalisation has also weakened regulation at the national level. Many
countries have set up special investment zones that are not only tax free but also free
of virtually all regulations. A coalition of several influential NGOs are calling for
international codes requiring that transnational corporations disclose information about
the environmental and human impact of their work. The proposal is based on the US
Toxic Release Inventory which requires companies to disclose annual emissions of
toxic chemicals. Corporations should be held responsible for legal wrongs. But as long
as consumers continue to demand ever-cheaper goods and services, businessmen will
find ways to deliver. Much of the success or failure of a corporate social responsibility
movement depends on ethical consumerism.
Voluntary corporate codes of conduct
Many critics of corporate globalisation favour a return to stronger national
regulation, a perspective that mirrors the protectionist backlash. Pro-business voices,
on the other hand, insist that the globe must be the playing field, but that formal
global rules would ruin the “new economy,” which needs at most loose voluntary
codes. Though voluntary codes are obviously weak and unevenly adopted, advocates of
more robust global regulation must find an institutional basis for binding regimes. In
the absence of a sovereign authority, what institutions can adopt and enforce binding
rules at the global level? Unfortunately, voluntary corporate codes of conduct have
many weaknesses — so many that it is difficult to point to a single case that is an
unqualified success.
These codes are often vague statements of principle that cannot provide reliable
guidelines for behaviour in concrete situations. They do not generally include
complaint procedures, nor any basis for legal claims or redress, and thus provide little
scope for individuals to be compensated for corporate violations that cause harm.
Corporations do not adopt codes unless faced with public
Page: 18
pressure and negative publicity. This means that codes are adopted by only a few
sectors that are especially vulnerable to consumer pressure and boycotts. Corporations
adopting codes are likely to consider themselves to be at a competitive disadvantage if
they actually put the code into practice.
Enforceability and transparency are often addressed through the use of third parties
that monitor a corporation's adherence to the standards. Sometimes, this is done by
large public accounting firms. A corporation whose code of conduct is subject to audit
is often given a report that it does not have to make public. The large majority of
codes remain weak, untransparent and unenforceable, simply because these are the
types of codes with which the corporations are most happy and which meet their
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public relations goals. Binding legal regulations demand adherence, and have behind
them the obligation deriving from a public authority.
Of course, no sovereign State-like power exists at the global level that can adopt
and enforce global regulations. But we are in a period of transition. In recent years,
Governments have negotiated an increasing number of binding agreements at the
international level and have devised more or less effective means to enforce them.
Growing need of transborder cooperation
Court cases and related legal efforts usually spring from particularly outrageous acts
of corporate malfeasance such as the Bhopal disaster, Shell's actions in Nigeria and
Unocal's Burma oil pipeline14 . Plaintiffs seek redress, and their legal teams usually
seek to expand and strengthen the capacity of law at the international level to impose
liability on corporations for actions that do harm the environment, human health and
basic rights. Such initiatives typically rely on an inventive combination of national and
international law, but they frequently contribute to emerging international legal norms
and standards. Establishing legal standing across national borders is one of the
biggest barriers to such actions.
Intergovernmental action could help promote this expansion of law in a variety of
ways — for instance, by developing an International treaty of legal cooperation which
would allow prosecutors or judges in one national jurisdiction to call on the judiciary in
another national jurisdiction for help with evidence, including the questioning of
suspects and witnesses, which is a growing need in all transborder cases.
Global policy instruments
Global taxes, fees and fines are policy instruments that could shape corporate
action to promote more sound development. Taxes or other levies use market pricing,
rather than regulatory rules, to press companies to adopt more socially responsible
policies, for example, they can create a disincentive for financial speculation (Tobin
tax) or they can create a disincentive for the use of carbon-based fuels or the
production of products dependent on carbon-based fuels (Carbon tax).15 The revenues
raised by these instruments could be used to fund global agencies such as the UN, and
they could be used to correct existing problems — to clean up environmental
disasters. Levies might be based on national legislation and harmonised internationally
through a treaty or other accord.
This, however, implies erosion of the States’ sovereign taxing powers, still a
sensitive area. Unfortunately, the United States has been staunchly opposed to
international taxes and has
Page: 19
blocked progress in this field during the past decade. Progress remains possible,
however, and a vigorous international campaign led by the France-based international
non-governmental organisation, ATTAC has given the idea growing momentum.
Hence, if we ask ourselves, if moral capitalism is possible in the context of a

corporate socially responsible business? The answer, one can definitely say, can never
be an absolute YES or an absolute NO. Yet I believe that it is possible. Seeking market
profit through business is honourable and worthy. Moral capitalism is the most
appropriate means by which our modern, global civilisation can empower people and
enrich their lives both materially and spiritually.
The successful road for any business that wants to become a corporate socially
responsible company is definitely not a romantic, flower-strewn path with an
expansive vista, nor is it easily navigable. Any successful corporate socially responsible
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company must navigate down the narrow and winding lane of business ethics with its
many procedures and laws, avoiding the potholes of sloppy and ineffective business
practices, and the soft shoulders of greed and unethical behaviour. And unless the
corporate giants themselves realise their responsibility, many more Bhopals will
continue to happen.
———
* IVth year student, National Law Institute University, Bhopal.
1
Ingrid Eckermam, The Bhopal Saga: Causes and Consequences of the World's Largest Industrial Disaster, 1st
Edn., Universities Press (India) Private Limited, Hyderabad 2005, at p. 54.
2 Krishna Iyer, A Constitutional Miscellany, 2nd Edn., Eastern Book Company, Lucknow (2003), at p. 228.
3 www.hoovers.com/union-carbide/—ID—11540—/free-co-factsheet.xhtml
4 http://www.bhopal.com/
5 UCC has been taken over by Dow Chemicals and under Indian law Dow not only bought the assets, but also the
liabilities of Union Carbide and can therefore be held to account.
6 See supra Note 1 at p. 132
7 Charan Lal Sahu v. Union of India, (1990) 1 SCC 613
8 See supra Note 3

9Jugdment of the US District Court dismissing Union of India's case on the grounds of forum non conveniens as
on 12-5-1986.
10 Union Carbide Corpn. v. Union of India, I.As. Nos. 46-47 in C.As. Nos. 3187-88 of 1988 decided on 19-7-2004
11 See supra Note 1 at p. 207

12 (1996) 6 SCC 665 at p. 692, para 42.
13 See for example the opinion of the majority in Standard Chartered Bank v. Directorate of Enforcement, (2005)
4 SCC 530 : 2005 SCC (Cri) 961 wherein the Supreme Court has expounded principles for corporate criminal
liability.
14 http://www.corporateknights.ca/stories/Shell_Wiwa.asp
15
en.wikipedia.org/wiki/Carbon_tax
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notification is being circulated on the condition and understanding that the publisher would not be liable in any manner by reason of any mistake
or omission or for any action taken or omitted to be taken or advice rendered or accepted on the basis of this casenote/ headnote/ judgment/ act/
rule/ regulation/ circular/ notification. All disputes will be subject exclusively to jurisdiction of courts, tribunals and forums at Lucknow only. The
authenticity of this text must be verified from the original source.

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SCC Online Web Edition, Copyright © 2020

Page 1 Saturday, October 03, 2020

The fact sheet of the Union Carbide Corporation3

And the wounds never heal….

Hence, if we ask ourselves, if moral capitalism is possible in the context of a

8 See supra Note 3

11 See supra Note 1 at p. 207

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