How the Rajiv government screwed up on Bhopal

ALOK PRASANNA writes from Bangalore: Today is the 23rd anniversary of the horrific Bhopal gas tragedy. While most people remember or know of the disaster, few, if any, know the full story behind the litigation or why no one can build a legal argument against Dow that can stand up to scrutiny in a Court.

I myself got the details through someone who was involved intimately in the litigation and the rest was filled out by my law school education. It was a complete and total failure of the government of the day and the legal system itself.

In this post, I will deal with how and where the government bungled, and deal with the legal system in the next.

After the Bhopal gas tragedy, before even the crematoria had ceased their grisly work, American lawyers by the planeload were flocking to Bhopal to make a killing out of possibly one of the biggest tort claims in recent history: 3,000 dead (officially), several thousand severely injured for life and possibly lakhs affected. And one of the biggest multinationals of the day, multi-billion dollar company, Union Carbide Corporation (UCC) was involved.

It was a legal feeding frenzy that few would be able to resist.

As initial reports of the pending flood of litigation claims started to trickle through, the Indian government, fearing exploitation, and an opportunity to turn this into an emotive, electoral issue, instantly passed a law prohibiting all but itself from representing the victims in any forum anywhere in the world. Then it went ahead and made a mockery of the move.
It filed suit in the District Court of New York, USA.

By itself, there was nothing legal preventing the Indian government from doing so. US courts had jurisdiction since it was claimed that UCC, a company based in the USA, was responsible. Besides, governments routinely litigate in other countries’ courts for commercial disputes and the like. However, it was not so simple this time.

Before even the first papers had even been filed, the then-Prime Minister Rajiv Gandhi started making grandiose claims of a $2 billion compensation that his government would be seeking from UCC.

Big mistake.

Any lawyer would connect this statement to the filing of the suit in the USA and ask the American court to dismiss the case since the Indian Government was “forum shopping”, or in lay terms, simply looking for the best bargain. American Courts since 1981 had stopped entertaining foreign claims that could be filed elsewhere, but had been filed in the USA with the sole motive of getting a better award of damages. Besides, India didn’t exactly have the burgeoning foreign exchange reserves we have today, and this conclusion was all too easily drawn.

To counter this, the Indian government made an even more stupid move. It claimed that the Indian judicial system was incompetent and inefficient to deal with the problem. It got professors and experts to file affidavits running down the Indian judicial system before American courts.

Humiliatingly, it was upto the UCC lawyers to defend the Indian judicial system asking for the case to be moved to India. They also pointed out the simple logistical problem of having to haul thousands of documents, mountains of evidence and thousands of witnesses halfway across the world for a trial.

Naturally no American court wanted to be stuck with an expensive, unending case on its hands and the district court of New York threw out the case. The Indian government cut a pretty sorry figure as it dragged itself to the district court of Bhopal, Madhya Pradesh for the next round of litigation. Before the same judicial system and judges it claimed were incompetent and inefficient.

The case dragged on without coming close to trial. It had been three years since the tragedy and the government had not a single cent to show for the efforts it had put in. Desperate it asked for some form of interim compensation from the district court, and received the princely sum of Rs. 250 crore, or a little more than $150 million dollars. Immediately this was challenged by UCC’s lawyers and the matter soon reached the Supreme Court.

Sensing the need to put an end to this sordid affair, the Supreme Court asked the parties to settle the matter in light of the victims’ plight. They did. UCC got away with a $470 million payment, and the government had something to show for its efforts. The devil, unfortunately, lay in the details.

When making the payments, UCC demanded that it must not be held directly responsible and all criminal cases be dropped (Warren Anderson, CEO of UCC, had been arrested and released on bail payment of Rs. 25,000). Faced with the prospect of prolonged negotiations and litigation and abject surrender, the Indian government, with all of its sovereign power chose abject surrender.

While the Supreme Court later overturned the second condition as being against public policy (sparking an Interpol hunt for Warren Anderson), these conditions effectively meant that UCC got away virtually scot free. This was made concrete with the acquisition by Dow, effectively ending all existence of the UCC.

A few low level workers and officers of UCIL (the Indian subsidiary of UCC which actually ran the plant) were prosecuted for culpable homicide causing negligent deaths and sentenced to a few years in prison. The big fish, including Warren Anderson, got away.

The saga doesn’t end there. The long and painful process of disbursing the amount began and took about 20 years after the settlement. Long slow and laborious the “tribunals” set up by the Government to hand out the awards functioned pretty much like Courts and one needed the help of numerous touts, lawyers and doctors before rightly deserved compensation was gotten. The net result was that the victims didn’t get as much money or as quickly as was promised.

All of this can possibly attributed to run-of-the-mill bungling by the government. Except in this case, the government was as liable as UCC for the Bhopal gas tragedy. Both UCC and the Indian government were shareholders in UCIL. UCIL alone was too small (all assets amounting to Rs 100 crore only) to be made wholly liable for the affair. Any attempt to make UCC liable as a shareholder would automatically make the Indian government liable on an equal footing.

Take a step back and look at it from a distance. One of the defendants in the case, by using its sovereign powers, has usurped the claimants’ rights and ensured that it has not been made liable. It has gone to the extent of settling the case for a far lesser claim than promised instead of fighting for every last penny and virtually let the offenders go scot free.

Next: why the Government couldn’t have done much better even if it tried.