4. CASE STUDY OF THE BHOPAL DISASTER 4.1. THE BHOPAL PLANT The Bhopal plant was owned and operated by Union Carbide India, Limited (UCIL), an Indian company in which Union Carbide Corporation held just over half the stock. The other stockholders included Indian financial institutions and thousands of private investors in India. UCIL was established in 4934, when Union Carbide Corporation (UCC) became ‘one of the first U.S. companies to invest in India. UCIL was a diversified manufacturing company, employing approximately 9,000 people and operating 14 plants in five divisions. Annual sales were nearly $200 million, and UCIL shares were publicly traded on the Calcutta Stock Exchange. In the late 1970s, the Bhopal plant was designed and constructed by UCIL using Indian consultants and workers and went on to be operated by an Indian plant management team. The plant was constructed on land leased to UCIL by the Indian state government of Madhya Pradesh. The plant produced pesticides for use in India to help the country's agricultural sector increase its productivity and contribute more significantly to Id's most heavily populated regions. In 1994, meeting the food needs of one of the wor Ree poration gold its entire stake in UCIL to Macleod Russell (India) ady Industries India Limited. In 1998, the Union Carbide Con y to Evora imit i d the compan fr Seen ea Madhya Pradesh took over the Bhopal site from Eveready government, of state of Industries India, Limited. - CHRONOLOGY ia Limited (UCIL) was established in 1934, when Union Carbide wien Cat e one of the firat U.S. companies to invest in India. UCIL shares eorneralon uce) Pee the Calcutta Stock Exchange. UCIL was a diversified were publicly vaded 9 vying approximately 9,000 people and operating 14 plants manufacturing company emplo infive divisions built in the late 4970s and was owned and operated by Union ; an n company that was owned by Union Carbide The Bhopal plant wa Indian co Carbide India, ed (UCICorporation (which held just over half the stock) and Indian financial institut thousands of private investors in India. ; ! The plant produced pesticides for use in India to help the country’s agriculturay ignific meeting the food n¢ 3 increase its productivity and contribute more significantly to 0 leeds, Of ne of the world's most heavily populated regions. > 1984 Dec3 The Bhopal Gas Tragedy . Shortly after midnight, methyl isocyanate (MIC) gas leaks from a tank at the UCIL Bhopal plant. Approximately 3,800 people die and several thousang’ other individuals experience permanent and partial disabilities. Dec4 Immediate action Word of the disaster is received at Union Carbide headquarters in Connecticut. Chairman and CEO Warren Anderson, along with a technical team, depart to India to assist the government in dealing with the incident. _ Upon arrival, Anderson is placed under house arrest and urged by the Indian government to leave the country within 24 hours. tg Union Carbide organizes a team of international medical experts, as well as supplies and equipment, to work with the local Bhopal medical community The UCC technical team begins assessing the cause of the gas leak. y Dec 14 Warren Anderson testifies before Congress and stresses UCC commitmer to safety and promising to take actions to ensure that a similar incident “cannot happen again.” 1985 : ; : Feb Interim relief ion Carbide establishes fund for Uni a i victims of th — the (UCC) Employees’ Bhopal Relief Fund, He tragedy, 7. thet which collects more than $120,000. UCC sends more medical equipment to Bhopal. Mar Study Launched be UCC launches disaster Program to study effects of Over-exposure to ic. Bhopal Gas 1 Government India ii, he Bhopal Gas Leak Disaster Act that enables.Case Study A29 Apr June July 1986 Jan Mar May 1987 the Govern claims arena ny Odi to act as the legal representative of the victims in 'sing of or related to the Bhopal disaster. Cause UCC Technical team rey si ed jaan to the MIC tank any ports that a large volume of water was introduced in ee ind triggered a reaction that resulted in the gas release. 'Y; 2 Committee of experts for the Indian government arrives at the same conclusion. Union Carbide offers $7 million interim relief UCC offers $5 million in relief for victims before the U.S. District Court, bringing total to date to $7 million. Government of India rejects Union Carbide relief Government of India rejects UCC offers of aid for Bhopal victims. Additional Aid UCC funds participation of Indian medical experts in meetings to obtain information and the latest medical treatment techniques for victims. Additional Analysis Core samples confirm water triggered reaction that led to gas release. Union Carbide funds hospital Union Carbide offers $10 million to the Indian government for building a hospital to aid the victims in Bhopal. Union Carbide proposes $350 milion as settlement for victims and families oses a settlement amount of $350 million that will opal victims of between $500-600 million over 20 lorneys endorse amount. Union Carbide prop generate a fund for Bh years. Plaintiff's US att insferred to India tion tral y Bhopal tae ige transfers all Bhopal litigation to India. Decision is U.S. District Court Jud appealed. ppeals affirms transfer of litigation to India hat UCIL is separate entity, owned, managed and operated s in India. U.S. Court of A The court rules l exclusively by Indian citizen t of India closes vocational technical center Governmen!ne Eig 1988 Jan- May 1989 Feb May The Government of India closes and razes the rain and Vocational Training Center built by Arizona State ee ne me determining that Union Carbide Corporation supplied funds for the project, Union Carbide announces humanitarian relief scale Union Carbide offers an additional $4.6 million in humanitarian interim retie, for immediate rehabilitation of Bhopal victims. Litigation in India Throughout 1988, arguments and appeals before the Indian Courts took Place regarding compensation for the victims. In November, the Supreme Court asks the Government and UCC to reach a settlement, telling both sides to “start with a clean slate.” New evidence on causation Independent investigation by engineering and consulting firm Arthur D. Little, Inc., concluded that the gas leak could only have been caused by deliberate sabotage; someone intentionally connected a water hose to the gas storage tank, causing a massive chemical reaction. Final settlement at $470 million The Supreme Court of India directs a final settlement of all Bhopal litigation in the amount of $470 million, to be paid by March 31, 1989, Both the Government of India and Union Carbide accept the court's direction, ucc pays $420 million, UCIL pays the rupee equivalent of $50 million (including $5 million of interim relief previously paid). Union Carbide makes full payment Within 10 days of the order, UCC and UCIL make full payment of the $470 million to the Government of India. Supreme Court of India renders opinion The Supreme Court, in a lengthy Opinion, explains the rationale for the settlement and emphasizes ihat the compensation levels provided for in the Settlement are substantially higher than those ordinarily payable under Indian law. Government of India to act on behalf of victims The Supreme Court upholds the validity of the “Bhopal Gas Leak Disaster Act, of 1985” that authorized the Government of india to act on behalf of theSupreme Court of India proceedings aim to overturn settlement | Hearings are held throughout year on activist petitions to overturn the _ settlement agreement. Nov | List of victims to be compensated prepared | The State Government of Madhya Pradesh submits to the Supreme Court of ; India the completed categorization of the claims of all of the victims. The | State determines that, in addition to the victims who suffered various levels | of iti | Supreme Court Hearings conclude | Court concludes review of petitions seeking to overturn settlement. 1991 Oct | Supreme Court confirms the settlement and closes legal proceedings The Supreme Court of India upholds the civil settlement of $470 million in its | entirety and sets aside portion of settlenent that quashed criminal | prosecutions that were pending at the time of settlement. Court also: * Requires Government of India to purchase, out of settlement fund, a | group medical insurance policy to cover 100,000 persons who may later develop symptoms; ! « Requires Government of India to make up any shortfall, however unlikely, in settlement fund; Gives directions concerning the administration of settlement fund; “Dismisses all outstanding petitions seeking review of settlement; and, Requests UCC and UCIL to voluntarily fund capital and operating | { i i ! costs of a hospital in Shopal for eight years, estimated at approximately $17 milion, to be built on land donated by state government. i e to fund the hospital, as requested. |__| UCC and UCIL agree to fund re none1992 . s nee Apr | Union Carbide sets up Trust fund i _ UCC announces plans to sell its 50.9 percent | UCC establishes charitable trust to ensure its share of the funding to builg ae | hospital in Bhopal and fund operations for up t eight years, interest in UCIL. 1993 acu si Oct U.S. Supreme Court denies hearing on legal standing | The U.S. Supreme Court declines to hear appeal of lower court affirming that Bhopal victims lack standing to sue for demages in U.S. courts. Apr | Union Carbide to sell stake in Union Carbide India Limited | Supreme Court of India allows UCC to sell all its shares in UCIL so that | assets can be used to build Bhopal hospital. Nov | Union Carbide completes sale _ UCC completes sale of 50.9 percent interest in UCIL to McLeod Russell | (india) Ltd. of Calcutta. f Dec | Union Carbide fulfills initial commitment i | UCC provides initial $20 million to charitable trust for Bhopal hospital. | j 1995-1999 | Building of the Hospital charitable trust ' _Hosptlcharable rust begins fecity constuction in October 1888, | UCC provides approximately $90 million from sale of all its UCIL stock. | | By 1999, trust has $100 million. Bui | medical staff being selected. The h | of eye, lung and heart problems. Iding is completed and physicians and ospital will have facilities for the treatme!oe A33 2001 : Hospital opens to public 7 eet si | The Bhopal Memori : Mor “ | proceeds from ea og and Research Centre, funded largely by eee © of all its UCIL stock, begins treating patients. July | Supreme Court of india ord i lers rel oa | Fifteen years after reachin lease of extra settlement funds to victims | \g settlement, the Supreme Court of Indi eG < . of India ordered | ‘ane Aone of India to release all additional settlement funds to the | - News reports indicate that there was approximately $327 million in | the fund as a result of earned interest from remi s interest fre i i i money remaining after all clair 4.3. THE INCIDENT, RESPONSE, AND SETTLEMENT In the early hours of December 3, 1984, methyl isocyanate (MIC) gas leaked from the Union Carbide India Limited (UCIL) plant in Bhopal, India, According to the state government, approximately 3,800 people died, approximately 40 people experienced permanent disability, and approximately 2,800 other individuals experienced partial disabilities. Shortly after the gas release, Union Carbide launched an intensive effort to identify the cause. An initial investigation by Union Carbide experts reported that a large volume of water had apparently been introduced into the MIC tank, causing a chemical reaction forcing the chemical release valve to open and allowed the gas to leak. A committee of experts working on behalf of the Indian government conducted its own investigation and reached the same conclusion. An independent investigation by the engineering consulting firm Arthur D. Little determined that the water could only have been introduced into the eal - were in place and operational that would have tank deliberately, since safety systems prevented water from entering the tank by accident. 4.4, UNION CARBIDE’S RESPONSE EFFORTS In the wake of the release, Union cre continuing aid to the victims and cat w Inthe days, months and years following : rovi inuit id: actions to provide continuing al * 5 immediately provided approximately $: Relief Fund. ee i and co! = Immediately ‘anal team of ME Sent an internal and assistance’ fe Corporation provided immediate and ‘a process to resolve thelr claims. ster, Union Carbide took the following 2 million in aid to the Prime Minister's vided medical equipment and supplies. .dical experts to Bhopal to provide expertiseHospital opens to public. The Bhopal Memorial Hos - “ orial Hospi proceeds from UCC. Rae and Researc! le of all its UCIL sto Ne et a eae 2004 h Centre, funded largely by ck, begins treating patients, July | ‘Supreme Court of indi : ea ia order Fifteen years ater no gort lease of extra settlement funds to vitims ching settlement, the Supreme Court of India ordered wane init Please all additonal setlement funds tothe the fund 96 cPans incite that there was approximately $327 monn [etn sa eamed interest from money remaining after all claims. | | : 4.3. THE INCIDENT, RESPONSE, AND SETTLEMENT In the early hours of December 3, 1984, methyl isocyanate (MIC) gas leaked from the Union Carbide India Limited (UCIL) plant in Bhopal, India. According to the state government, approximately 3,800 people died, approximately 40 people experienced permanent: disability, and approximately 2,800 other individuals experienced partial disabilities. Shortly after the gas release, Union Carbide launched an intensive effort to identify the cause. An initial investigation by Union Carbide experts reported that a large volume of water had apparently been introduced into the MIC tank, causing a chemical reaction forcing the chemical release valve to open and ee ne oss is leak. A conmitee at ir If of the Indian government conducted its own investig: eee tn panes ‘An independent investigation by the engineering consul fim Ahur D. Little determined that the water could only have been introduced into the nur D, Eide, tems were in place and operational that would have tank deliberately, since safety syst prevented water from entering the tank by accident. ; FORTS 44, UNION GARBIDE'S RESPONSE Carbide Corporation provided immediate and In the wake of the release, pes up a process to resolve’ their claims. Senin aid to ine vars fling the disaster, Union Carbide took the following Inthe days, months ani e actions to provide continuing ae approximately $2 milion in aid to the Prime Ministers = Immediately prov! ief Fund. x peat and continuously Prov medi =. Sent an international team of and assistance. ided medical equipment and supplies. ical experts to. Bhopal to provide expertiseoN Enginceny AG 8incering Bp * Funded the attendance by Indian medical experts al special Meeting research and treatment for victims. 4 * Provided a $2.2 million grant to Arizona State University esta vocational-technical center in Bhopal, which was constructed and Bene was later closed and leveled by the government, * Offered an initial $10 million to build a hospital in Bhopal; the Offer declined, ‘+ Provided an additional $5 million to the Indian Red Cross; ee * Established an independent charitable trust for a Bhopal hospital and prov, initial funding of approximately $20 million. * Upon the sale of its interest in UCIL, and pursuant to a court order, Provided approximately $90 million to the charitable trust for the hospital. 4.5. THE SETTLEMENT As Union Carbide continued to provide interim relief funds and work with the community on medical and economic aid, legal actions proceeded in both the US, and India. The courts ultimately decided that the proper country for legal proceedings wa India and matters were consolidated and proceeded before the Supreme Court of India, In May 1989, Union Carbide and Union Carbide India Limited (UCIL) entered into a $470 million legal settlement with the Government of India, which represented al claimants in the case. The settlement was affirmed by the Supreme Court of India, which described it as “just, equitable and reasonable,” and settled all claims arising out of te! incident. Ten days after the decision, Union Carbide and UCIL made full payment of te $470 milion to the Indian government. The settlement award was much larger than any previous damage award in India, and was $120 million more than plaintiff's lawyers had told U.S. Courts was fair, The settlement was reached after the Supreme Court of India reviewed all U.S. and Indian court filings, applicable law and relevant facts, and an assessment of the victims’ needs. its opinion, the Court said that compensation levels under the settlement were fat greater than would normally be payable under Indian law. By November 1990, the Reserve Bat of India reported that the settlement fund, with interest, was approximately twice what 25 estimated to be needed to compensate the victims. To resolve continuing legal disputes, the Supreme Court of India later upheld the $470 million settlement in its entirety and dismissed all outstanding petitions seeking reve the settlement. Pursuant to the settlement, the Government of India assumed responsibly | disbursing funds from the settlement and providing medical coverage to citizens of in the event of future illnesses. n July 2004, fiteen years after reaching settlement Supreme Court of India ordered the Goverment of India to release™all a settlement funds to the victims. News reports indicate that there was approximate $2) million in the fund as a result of earned interest from Money remaining after all claims been pai