Who is liable for the tragedy and why?

A final issue relates to who should bear the responsibility for the disaster. There are four
possible repositories of liability: (1) Carbide (India), the immediate owner of the facility from
which the gas escaped;
(2) the shareholders of Carbide (India), including Carbide (U.S.);
(3) the victims; and
(4) the regulatory authorities, possibly including the Government of India, the Government of
the State of Madhya Pradesh, the Government of Bhopal, and the United States Government.
Reasons for their liability
1. It has been alleged that Carbide (India) should be liable either on a strict-liability theory
or because it was negligent in operating the plant and in failing to provide sufficient
warning to the potentially affected population.
2. It has been alleged that Carbide (U.S.) should be liable on the theory that it was
negligent with respect to training persons to operate the plant, designing the plant, or
controlling its subsidiary. In addittion, it has been argued that a multinational enterprise
as a whole should bear financial responsibility for all of its activities, regardless of
corporate form, and, alternatively, that traditional doctrine regarding piercing the
corporate veil indicates liability on the part of Carbide (U.S.). It might also be argued
that Carbide (U.S.) is directly liable by analogy to the "entrustment" doctrine, i.e., that a
bailor is liable to an injured third party if the bailor knew or should have known that it’s
bailee was likely to harm the third party and failed to take reasonable precautions to
protect the third party. Finally, as an alternative to holding Carbide (U.S.) directly liable,
it might be argued that Carbide (India) has a right of contribution or indemnification
against Carbide (U.S.), either on the basis of the entrustment doctrine argument just
described or on the basis of a contractual or common-law duty on the part of Carbide
(U.S.) to supply Carbide (India) with safe and up-to-date technology and assistance.
3. It has been argued that some of the victims are at fault, and thus should be wholly or
partly liable, because they knew or should have known that there existed danger in
living close to the plant and never the less moved onto vacant land surrounding the
plant. That argument is obviously extremely harsh; it flies in the face of economic
realities in India.
4. With respect to the regulatory authorities, it has been argued that the Government of
India and the state and local governments were negligent and thus should be liable for
allowing the shantytown to develop so close to the plant (possibly in violation of an
Indian ordinance mandating a vacant zone around such a plant 31 ), for regulating the
safety conditions in the plant in a faulty manner, or for applying pressure with respect to
hiring personnel who were more qualified by their political affiliation than by their
professional competence. The Government of India, however, appears to be shielded by
sovereign immunity under Indian law and probably also would have been under the
United States Foreign Sovereign Immunities Act if it had not brought suit itself in United
States courts, and thus opened the way to counterclaims arising out of the same
occurrence. It has been alleged that the United States should be liable for not
adequately regulating Carbide (U.S.), an allegation that probably is not persuasive but
which has potentially far-reaching ramifications.