THE BHOPAL CASE: CONTROLLING ULTRAHAZARDOUS INDUSTRIAL ACTIVITIES UNDERTAKEN BY FOREIGN INVESTORS
| DOI | http://doi.org/10.1111/j.1468-2230.1987.tb01726.x |
| Author | P. T. Muchlinski |
| Published date | 01 September 1987 |
| Date | 01 September 1987 |
THE
MODERN LAW REVIEW
Volume
50
September
1987
No.
5
THE BHOPAL CASE: CONTROLLING
ULTRAHAZARDOUS INDUSTRIAL ACTIVITIES
UNDERTAKEN BY FOREIGN INVESTORS
UNION Carbide
of
India Ltd. (U.C.I.L.), a subsidiary
of
the
American corporation Union Carbide' produced pesticides at its
Bhopal plant in the State
of
Madhya Pradesh. One
of
the
ingredients in the production
of
these pesticides was methyl
isocyanate (M.I.C.), a highly toxic gas. On the night
of
December
2-3, 1984 a substantial quantity
of
this gas leaked from the plant
and drifted across Bhopal. It moved over settlements
of
poor
squatters, who were living dangerously near to the plant, and into
the most densely populated parts
of
the city. About 2,000 people
are thought
to
have died, with over 200,000 injured. Long-term
after-effects are expected in persons who were exposed
to
the gas,
and deformities are likely in babies whose mothers were pregnant
when exposed to the gas.'
The long-term economic and social consequences
of
the accident
are hard to determine. In addition to the disabled, there are the
dependants of the dead and injured. Already some 487,000 claims
have been filed in India under the statutory scheme for the
registration and processing
of
claims set up by the Bhopal Gas
Leak Disaster (Processing of Claims) Act 1985 (The Bhopal
The resulting American litigation involved some 145 actions
representing approximately 200,000
applicant^.^
This is the largest
accident liability action in history.
On May 12, 1986 District Judge John
F.
Keenan ordered the
American actions to be dismissed on the ground that the United
States District Court for the Southern District
of
New York was
not an appropriate forum for the determination of the legal issues
'
The American parent owns 50.9 per cent.
of
the stock in
U.C.I.L.,
the Indian
Government owns
or
controls 22 per cent., thc remainder being owned by some 23,500
private stockholders in India.
'
See
Financial Times,
July
5,
1985.
'
Re
Union Carbide Corporafion Gas Planf
Disaster
Opinion and Order
May
12, 1986,
p.4
(hereafter cited as
Opinion and Order).
The Opinion is reproduced in (1986) 25
I.L.M.
771.
'
Ibid.
545
546
THE
MODERN
LAW
REVIEW
[Vol.
50
involved. This decision was affirmed by the United States Court of
Appeals for the Second Circuit
on
January
14, 1987.5
These events form the basis of the present paper which is
divided into six parts. The first will describe how the case was
brought to the United States and how the proceedings before
Judge Keenan were eventually organised. The second will outline
parallel legal developments in India, concentrating on the Bhopal
Act, which proved to be influential upon the eventual outcome
of
the United States proceedings. The third part will concentrate on
the legal arguments presented to Judge Keenan and his response to
them, while the fourth part will consider the reasons given by the
United States Court
of
Appeals for upholding Judge Keenan’s
order. The fifth part will concentrate on the possibilities
of
an out-
of-court settlement and on the legal issues that an Indian court
might face, in the absence of a prior settlement of the case. The
final section
of
the paper will consider some of the most pressing
policy issues that this case raises which, it is believed, traditional
forms
of
private litigation cannot successfully resolve.
THE
BRINGING
OF
THE
CASE
BEFORE
THE
UNITED STATES
COURrS
Almost as soon as the accident had occurred American lawyers
became involved. They arrived in Bhopal to sign up clients for
suits in the United States courts or to attempt an out-of-court
settlement, reserving for themselves as fees a proportion
of
any
sums received in compensation.‘ The first United States suit was
filed in the Southern District
of
West Virginia on December
7,
1984.
Subsequently a further
144
suits were filed.7
The actions
of
these lawyers have been criticised on ethical
grounds. From an Indian perspective, touting for business and
contingency
fee
arrangements are contrary to rules
of
professional
conduct.* In America, Judge Keenan noted that “those members
of
the American Bar who travelled the
8,200
miles
to
Bhopal in those
months did little to better the American image in the Third
World-or anywhere else.” He added, however, that none
of
the
counsel representing the plaintiffs in the action before him had
engaged in such acts.’
Underlying the initial activities
of
certain American lawyers is an
issue that will recur in any case involving the liability
of
a parent
company for the acts of its overseas subsidiaries. Who should
represent the victim(s) of those acts? If litigation is
to
be taken to
the parent corporation in the home country, then lawyers from the
home country will inevitably become involved. That,
in
itself,
Ibid.,
pp.62-63.
The
U.S.
Court
of
Appeals
Decision is,
as
yet, unpublished.
See
The Guardian,
December
17,
1984,
“Counting the
Cost
of
Misery” by Eric
Silver.
70’’
pinion
and
Order,
p.3.
See Dhavan
20
Texas International Law
Journal,
11.295
(1985).
90”
pinion
and Order,
p.4,
n.1.
SEIT.
19871
THE
BHOPAL
CASE
547
cannot be objectionable. What may be objectionable
is
the manner
in which home country lawyers are engaged. Undoubtedly, conflicts
of
perception over professional ethics will arise in this field and, in
order to avoid any future repetition.
of
unseemly scrambles
for
business, some clear, internationally acceptable, ethical guidelines
must be established. There
is
work in this area for bodies such as
the International Bar Association, which has examined some
of
the
issues arising from this case.”
Whatever the ethical arguments over the behaviour
of
certain
American lawyers may be, the fact remains that they set in motion
a legal process in the home country
of
the defendant corporation,
and challenged the United States legal system to respond. It was
clear that over a hundred separate actions in various courts across
the United States could not be allowed to take place in isolation
from one another. The first task was, therefore, to choose a venue
for the actions and to consolidate them.
Venue was chosen by the Judicial Panel on Multidistrict Litigation
sitting at New Orleans in January 1985.” By Order
of
February
6,
1985, the Southern District of New York (S.D.N.Y.) was selected
on the grounds that Union Carbide was a New York Corporation”
and because the S.D.N.Y. is one
of
the most experienced
commercial litigation centres in the United States.
Consolidation
of
the litigation proved more troublesome. A
hearing was scheduled before Judge Keenan on April
16,
1985. His
task was to decide who, out
of
the many lawyers involved, should
be entitled to represent the plaintiffs in the consolidated action. In
common with other major personal injury actions in the United
States, the Bhopal litigation produced a number
of
competing
groups
of
lawyers. Each group wanted the judge to certify it as the
rightful representatives
of
the plaintiffs. This might be the only way
to ensure pa ment and
so
a lot was at stake on how the judge
would move.
Matters were further complicated by the involvement
of
the
Indian Government in the case. While the individual plaintiffs’
actions were being brought, the Indian government was exploring
the possibility
of
an out-of-court settlement with Union Carbide,14
x
lo
The I.B.A. discussed the Bhopal case at its meeting in New
York
in September
1986.
Sce
601
F.
Supp.
1035 (1985).
The judicial Panel on Multidistrict Litigation is
authorised by
28
U.S.C.
s.l407(a)
to
transfer civil actions involving one
or
more common
questions
of
fact, that are pending in different districts, to any district for co-ordinated
or
consolidated pretrial proceedings. The Panel must determine whether transfers
of
such
proceedings will be for the convenience
of
the parties and witnesses, and will promote
the just and efficient conduct
of
the actions concerned.
I’
Union Carbide is a New
York
Corporation with its head office in Danbury,
Connecticut. Connecticut would not have been a good choice for the plaintiffs as that
state does not allow punitive damages in case
of
“wrongful death.”
Finuncial Times,
December 7,
1984,
p.3.
For
a full account
of
the competina factions and their squabbles see Stuart Diamond,
“Lawyers
Fees
in Bhopal Case”,
keew
pork
Times,
April
9, i985
D8.
Times,
April 4,
1985
D1.
l4
See
Stuart Diamond,
“US.
Lawyers Plan to
Keep
Bhopal Clients”,
New
York
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