International Law Case

In 1984, leaking gas from a chemical plant in Bhopal killed over 2,000 Indian citizens and injured over 200,000 more. In the aftermath of the disaster, numerous actions were filed against the owners of the facility. The plant was one of 14 facilities operated by Union Carbide of India Limited (UCIL). Union Carbide Corporation (UCC), an American firm, owned 51 percent of UCIL. The Indian government owned 22 percent of the company and the remainder was owned by individual Indian shareholders. (Though the stock was traded on the Bombay exchange it could, apparently, only be held by Indian citizens.) Because UCC and UCIL only came under the jurisdiction of the courts in their respective countries, the question of who could be sued, and by whom, became very tangled.

The problem that faced UCC and UCIL was the source of ultimate responsibility for such an incident when the various international laws and rules of ownership affect the parties' involvement in management and regulate the percentage of shares they could own. This is a basic problem for multinationals. The degree to which countries differ and agree on the rules governing such business arrangements is key to successful international operations. The Indian government claimed that UCC was negligent in its original designs for the plant and in allowing for excessive storage of the deadly gas (methyl isocyanate) at the facility. UCC claimed that its participation in construction, design, manag

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ituate the legal proceedings in India, the decision of the New York judge was made without prejudice regarding the validity of anyone's claims against either UCC or UCIL. The location of the trial was not the most significant problem. The terms of the partnership were, of course, fundamental concerns in both the question of location for legal proceedings and assignment of responsibility, but it is misleading to pay too much attention to the problem of jurisdiction. The problem lay in the conflict between the Indian government's desire to control all aspects of UCIL operations and the UCC's majority ownership of UCIL. The question of responsibility was not answered by the Indian courts in this case. In 1989, India's Supreme Court accepted a $470 million settlement fund as compensation for the victims at Bhopal. Though the case does not state this, it appears that the settlement fund was an arrangement reached by the various owners of UCIL. ALTERNATIVE COURSES OF ACTION There are several alternative approaches to the question of liability. India's case against UCC could have been pursued on the basis of the English principle of Respondeat Superior, which holds that "the superior is liable for the torts of the agent" (19)

Category: Government - I