bhopal, india and union carbide

8/14/2019 Bhopal, India and Union Carbide

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Bhopal, India and Union Carbide: The Second TragedyAuthor(s): R. Clayton Trotter, Susan G. Day and Amy E. LoveReviewed work(s):Source: Journal of Business Ethics, Vol. 8, No. 6 (Jun., 1989), pp. 439-454Published by: SpringerStable URL: http://www.jstor.org/stable/25071921.

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Bhopal, India andUnion Carbide:The Second TragedyR. Clayton TrotterSusan G. Day

Amy E. Love

ABSTRACT. The paper examines the legal, ethical, andpublic policy issues involved in theUnion Carbide gas leakin Indiawhich caused the deaths of over 3000 people andinjury to thousands of people. The paper begins with ahistorical perspective on the operating environment in

Bhopal, the events surrounding the accident, then discussesan international situation audit examining internal strengths

Clayton Trotter is agraduate of theUniversity of Texas School ofLaw and College of Business Administration. Currently, heteachesin both theCollege ofBusiness and theSchool ofLaw atTexas Tech University; andwasformerly Associate Professor ofLaw at theCoburn School ofLaw inVirginia Beach, Virginia.He has taught courses inReal Estate Law, Corporations, Inter

national Business Transactions, and Business Law.Mr. Trotter has been attorney of record in a number of contested civilcasesand has appeared in theFifth and Seventh United StatesCircuit Court ofAppeals on such cases.He is licensedinTexas,Florida and theSupremeCourt of theUnited States.He has authored a number of articles on business related legal

matters.Susan G. Day is a Texas Real Estate Broker, Escrow Agent, andInsuranceAgent. She graduated rom Texas Tech University

with a major in Business Administration with an emphasis onManagement. She currently attends Texas Tech Universitypursuing agraduate degree inEducation.

Susan isPast President of the Toastmasters International group atTexas Tech University giving speeches and lectures on real estateand law. In addition, Susan is a member of thefollowing associationsat Texas Tech University:Societyor Advancement of

Management, Marketing Association, Tech Management Association, Lubbock Legal Secretaries Association, National Association for Female Executives and theEx-Students Association.

Amy E. Love graduatedMagna Cum Laude inDecember, 1988with a Bachelor ofBusinessAdministration degree inManagementfrom Texas Tech University.Her long range oals includegraduate schoolwhere shewould like toemphasizeinance. Amyis a member of theSociety or Advancement ofManagement,Golden Key National Honor Society, Gamma Sigma HonorSociety, andPhi BetaKappaHonor Society.

and weaknesses, and external opportunities and threats facedby Union Carbide at the time of the accident. There is adiscussion of management of the various interests involvedin international public relations and ethical issues.A reviewof the financial ratio analysis of the company prior andsubsequent to the accident follows, then an examination ofthe second tragedy of Bhopal ? the tragic failure of theinternational legal system to adequately and timely com

pensate victims of the accident.The paper concludes with recommendations towards

public policy, as well as a call for congressional actionregarding international safety of U.S. based multinationaloperations.

Introduction ? The worst industrialaccident and the largest civil lawsuit inhistoryIn the late 1920s, Union Carbide Corporation beganoperations in India. At the time, India was still avassal state of the British Empire, Mahatma Gandhiwas pushing for Indian statehood, and WinstonChurchill's view on India's independence was quotedas: I am quite satisfied with my views on India, and Idon't want them disturbed by any bloody Indians .1

Many people today might not want their views onBhopal disturbed, and with all due respect to Mr.Churchill, in light of the fact that a number ofarticles have been written on the matter,2 one mightsay that there is no need to re-examine four yearsafter the occurrence of the deaths of over 3 000people and the injury to hundreds of thousands, theUnion Carbide methyl isocyanate gas leak inBhopal,India. When one begins discussing the disaster, andinternational legal relationships of a tragedy of thismagnitude, the human mind finds it difficult to

imagine, much less understand the complexities ofthe incident. Because of the intricacies of the issues,

Journal ofBusinessEthics 8:439-454, 1989.? 1989Kluwer Academic Publishers.Printed in the etherlands.


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440Clayton Trotter et al.the singular enormity of the tragedy, and the valueof human life, the authors have been persuaded thata review of Bhopal four years after the accident is inorder. Recent events not previously discussed in theliterature, such as the upgrading of the chargesagainst former Chair of the Board, Warren E.

Anderson, from man-slaughter to murder,3 and theriots which occurred at the plant on the fourthanniversary of the disaster4 further substantiate thenecessity for a reconsideration of the chemical holocaust. Perhaps,, as the late United States DistrictJudge, John H. Wood, Jr. used to jokingly say it alldepends on whose ox is being gored 5 meaning thatthe bottom line is all that any stakeholder inmodernbusiness is concerned with, be they corporation,union, government, or private investors. The purpose of this article is to underscore the secondtragedy, the glaring inadequacies of modern international dispute resolution processes and the failureof those systems, if it can be said that such systemsexist, to adequately develop a solution to the issuesof a tragedy of this magnitude.

Historical perspectiveIn 1969, Union Carbide India, Ltd. (UCIL) and

Union Carbide Corporation agreed with the government of India to build a pesticide manufacturingplant in Bhopal.6 Originally, this plant was designedto combine and package intermediate chemicalsthereby producing the end pesticide, Sevin.7 Theconstituents of the mildly toxic pesticide Sevin,alpha-naphthol and methyl isocyanate (MIC) wereto be combined, diluted with non-toxic powder, andpackaged at the Bhopal plant.8 In India, wherepesticides are viewed as a miracle,9 Union Carbidedemonstrated both sophisticated technology andexport potential to the government of India, therefore, the Union Carbide Corporation was permittedto own 50.9 percent of Union Carbide India, Ltd.which owned the Bhopal plant, and the remaining49.1 percent was distributed among Indian shareholders.10 Fifty and nine-tenths percent of its stock isowned by Union Carbide Corporation, 22% isowned or controlled by the government of India,and the balance is held by approximately 23 500Indian citizens.11 Union Carbide Corporation is acorporation incorporated under the laws of the Stateof New York.12

To maintain its operating license in India, UnionCarbide was forced to begin building a second plantin Bhopal during 1977. Before construction wasfinalized in 1979, substantial problems appeared,resulting in construction modifiations during 1978.

By 1980,the

plantwas considered

operational.13Though designed to produce 5 000 tons of Sevin peryear, the plant never operated at capacity.14In 1982, ten safety deficiencies were discovered.Through 1984, various stages of shutdown andpartial operation were evidenced; yet two of thedeficiencies remained uncorrected. The two remaining faulty safety devices had gone unrepaired for atwo year period of time and apparently managementdid not consider the problem to be of primary concern. The refrigeration unit designed to cool MICcontinued to malfunction. However, in June 1984,the headquarters of Union Carbide was told thatmost of the equipment and safety deficiencies uncovered at Bhopal in 1982 had been rectified .15 Onthe date of the accident, a pressure gauge was

missing on Tank 610, evidently making it possiblefor water to enter the tank, mix exothermically,16and form a toxic gas.Early in 1984,Warren Anderson, the Chair of theBoard17 of Union Carbide Corporation, and top

management endorsed a plan to sell the plant due toits underutilization.18 In October, 1984, Carbideexecutives announced its expanding investments inother lines of business ? petrochemicals, industrialgases, metal and carbon products, consumer products, and technological services and specialty products.19 Just as a new year was starting with twostrong quarters for Union Carbide, the Bhopal disaster occurred.20

On the evening of December 3, 1984, the plantwas operating far below capacity and was partiallyshutdown for maintenance.21 An operator noticedthat the pressure in one of the MIC storage tanksread ten pounds per square inch ? four times normal .22 The operator was unconcerned as he assumedthe tank had been pressurized with nitrogen bypersonnel on the previous shift and around midnight several workers noticed their eyes had begunto water and sting , a signal indicating a chemicalleak.23 The small leak was soon found; however,there was little concern as minor leaks at this plantwere common, and itwas time for tea and the crewretired to the company canteen, resolving to correctthe problem afterwards .24


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Bhopal, India and Union Carbide 441

Finally, the pressure in the MIC tank forced arelief valve open and poisonous gas could be seenescaping one hundred twenty feet into the air.25

Apparently because the accident occurred after duskand during winter, and because the chemical components of MIC were heavier than air, the gas drifteddown to the neighboring villages. Gas leaked forforty minutes from an underground tank andcovered a twenty-five square mile area.26As the gas spread, weak and elderly people diedwithin moments. Incoming trains were diverted,halting the most effective means of escape. Theaffluent fled in their cars.27 Approximately half ofthe 1000000 inhabitants of Bhopal fled on foot,28victims of the worst industrial accident in history.The Mayor of Bhopal was quoted as saying:

I can say that I have seen chemical warfare. Everything soquiet. Goats, cats, whole families ? father, mother,children ? all lying silent and still.And every structuretotally intact. I hope never again to see it.29

Indira Gandhi's assassination occurred in October1984, and the month-old government headed by herson, Rajiv Gandhi was faced with a devastatingcrisis.30 Decisions were made which would affect the

victims of the Bhopal gas leak who received permanent injuries such as burned lungs, charred eyes,or damaged nervous systems. Doctors predicted thepopulation would experience sterility, kidney andliver infections, tuberculosis, vision problems andbrain damage , in the short run, while the potentialfor birth defects and other long-term effects wereyet to be known.31 While subject to dispute, therewere reports that stillbirths were beginning to occurand fetuses were being aborted.32Three days after the accident, the city began tomove toward stability. The plant in Bhopal wasclosed and locked,33 and remains closed at this time.The Indian Minister of Chemical and Fertilizersaccused Union Carbide Corporation of failing toprovide the safety standards of United States plantsto the Indian plant.34 Nearly everything that couldhave gone wrong did.35 To date, at least 2 998 peoplehave been killed as a result of the gas, and over300 000 have received injuries.36

By comparison, had this accident occurred in SanAntonio, Texas, a city of approximately one millionpeople, the dead would be roughly equal to thepopulation of a large high school, and approximately

one-third of the city's inhabitants would have somedebilitating injury.The Indian government cancelled the operatinglicense issued to the Bhopal plant immediately afterthe accident.37 The accident gives rise to a newdefinition of the potential risks of operations of

multinational companies in foreign countries. Theiroperations will never be the same and their costs ofoverseas operations could increase due to accidentsof thismagnitude.38The Attorney General of India . . .vowed to sueUnion Carbide in an American court. . . 39becauseIndian courts are a less viable alternative to theplaintiffs. Indian laws require the plaintiff to pay avery high filing fee to begin the legalprocess,40andto date, there has yet to be a wrongful death judgment in India of more than $40000.41 Becausepunitive damages apparently do not exist in Indianlawsuits, Union Carbide would clearly benefit froma trial held in an Indian court even though economicdamages could be the same.42Wrongful death judgments often amount to a few rupees.43 According tothe Minister of India, two years after the accidentthe Indian government apparently made temporarybenefit payments for a measly $766 per family ofthose who died in the disaster, and $115 per familyof those injured.44In an attempt to protect its interest, the Government of India found it necessary to secure the bestrepresentation they could find45 by a firm specializing in product liability cases46 and mass disastercases.47 Culpable homicide not amounting to murder, causing death by negligence, mischief, andmischief by killing or maiming cattle, negligentconduct with respect to poisonous substances, andcriminal conspiracy charges were filed against executives of the Union Carbide Corporation.48 UnionCarbide was faced with lawsuits, according to someestimates, in amounts exceeding $35 billion dollars,far in excess of its corporate net worth.49

International situation audit

During the examination of Union Carbide's internaland external environments, the following internalstrengths and weaknesses, and external opportunities and threats seem to be strategically important inthe analysis and interpretation of the company's


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442Clayton Trotter et al.

international legal predicament with respect to theaccident.

Internal strengths

Two of Union Carbide's strengths relevant to thistragedy include its admirable safety record in thepesticides industry,50 and its tremendous financialstability.51Union Carbide's credibility is derived from itsreputation for safety concerns. Third world countries account for approximately one-half of theknown poisoning cases, and three-fourths of theknown deaths.52 According to company publications,Union Carbide Corporation is well known for itsadherence to safety standards53 on aworldwide leveland maintenance of an accident record substantiallybelow the industry average. In 1983, the chemicalindustry as a whole had a safety record whichshowed 5.2 reported occupational injuries per 100full-time workers. The reported average for all

manufacturing firms, in general, was 9.7 reportedoccupational injuries per 100workers.54At the time of the accident, Union Carbide Corporation was the third largest chemical producer inthe United States, following DuPont and DowChemical.

The Bhopal plant represented less than threepercent (3%) of Union Carbide's worldwide profit,and less than two percent (2%) of the corporation'snet income. The plant was not critically importanttoUnion Carbide's overall operations and any loss ofincome from the plant would not affect the company's financial status.55 At the time of the accident,Union Carbide's financial strength was $10.5 billionin assets,56 and approximately 98 000 people wereemployed by the firm.57 This figure has since beenreduced as Union Carbide spent $4.3 billion on aspecial dividend and stock buy-backs, and has sold$3.5 billion worth of assets in an attempt to prevent a

hostile takeover bid from GAP Corporation.58 Theprofit making divisions of Eveready Batteries, GladBags and Prestone Anti-freeze were sold, losingannual revenues of $6.9 billion, one-third of its 1981peak. Debt is now twice its former level, and standsat 63% of capital. The number of employees has beenreduced to 43 000.59

Internal weakness

Union Carbide's apparent weakness was poor management of the Bhopal plant, which may have arisenfrom a strategic management decision to sell theplant.In an effort to decrease expenses, managementallowed the plant and equipment to deteriorate,allowing attrition among qualified employees andlowered entrance standards resulting in a lack ofqualified applicants,60 which seems to have led to thegreater potential for accidents.Inwhat appears to be efforts to forestall economicfailure, extensive cost-cutting efforts were implemented by management,61 causing a significant decline in standards. Most important among theseefforts was the substantial reduction in qualifiedworkers. The original twelve operators assigned pershift was decreased to six and the work forcedropped from a high of 1500 to 950 people,62 yetstill remaining a major provider of job.63 Americansenior managers and junior executives, licensed toremain in India only for fixed periods of rime,perhaps resenting the company's falling standards,left the plant prior to 1982.64 Job entrance requirements were lowered and several training programswere eliminated.65 Jobs which previously requiredcollege degrees were reduced in classification andfilled by high school graduates with little or noprevious work-related experience.66A lack of qualified personnel and poor management may have led to the potential for employeesabotage. Management of the Bhopal plant claims anemployee may have deliberately tried to spoil abatch of the chemical inside Tank 610.67 The

Training Manual for Operators clearly emphasizes:'KEEPWATER AWAY FROM MIC 68UnionCarbide further claims awater connection to thetank was found and concealed by operators andsupervisors on the third shift .69 A sketch of the tanklayout on the back of the supervisor's daily notessuggests the possibility of sabotage.70 Union Carbidecontends log data and a pressure gauge were missingfollowing the accident. Management claims waterentered Tank 610, with at least 21 tons of MICinside, reacted exothermically, and generated carbon

dioxide , which increased pressure in the tank causing the gas to escape.71 Union Carbide concludes thatseveral employees attempted to cover-up significant


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knowledge of the accident.72 Evidendy, those costcutting efforts by Union Carbide contributed tocausing unsafe conditions or created the potential forsabotage.

External opportunitiesThe pertinent opportunities for Union Carbidewhich attracted the company to India in the firstplace, and which still exist today include: the needfor pesticides in India,73 the transportation systemlocated near the plant,74 the host country's demandfor their goods and services, and the attractive labormarket available in the Third World country.The enormous Indian population creates a greatdemand for Union Carbide's pesticides, and hascaused India's pesticide industry to become thesecond largest in Asia, following Japan.75 Previousestimations state that pesticides save 10% of theannual food crop in India, which equates to eradicating hunger for over 70 million people.76 Threequarters of the Indian population depend solely onagriculture for their livelihood,77 thus many Indianfarmers are dependent upon pesticides78 such anSevin produced by Union Carbide. This continuingdemand for Union Carbide's products gives someleverage

to thecompany

inhandling

the international legal predicament. However, that leveragedoes not solve the problem, but gives an incentive toseeking an equitable solution.Union Carbide's greatest opportunity in preventing the disaster from destroying the company wasthe fact that the tragedy occurred in India, a ThirdWorld country;79 had the accident occurred in theUnited States in a city of comparable size (i.e. SanAntonio, Texas) the company would probably havebeen destroyed by litigation. Exemplary and punitive

damagesare

rarely allowed in Indian lawsuits,80therefore, Union Carbide could benefit greatly fromlegal proceedings held by a court in India, ratherthan by a court in the United States. Nevertheless,unless settled, the Bhopal litigation will consumeresources for many years to come before final resolution of the matter.81

External threats

Many of Union Carbide's significant external threats

include lax enforcement of safety standards, a lack ofenvironmental protection, aswell as a lack of qualified personnel, and the lack of literacy in the Indianpopulation.Union Carbide was forced to agree to strictlicensing requirements prior

toobtaining

an operating license in India,82 however, environmental control agencies are small, underfinanced, and meagerlyrepresented by citizens.83 Even more damaging isthe reluctance of local officials to enforce the laws.

Without the political will to enforce the laws, noamount of legislation can improve India's environmental situation .84Due to a lack of land use control measures, a

colony or shantytown 85 of Indian citizens wereallowed to develop around the plant site. Apparendy,when the plant was sanctioned, its location was outside the limits of the city, but by the time productionbegan, a large colony had developed, making a largenumber of individuals vulnerable to emittents fromthe production of pesticides in industries.86An additional threat was the lack of qualifiedindividuals operating the plant and equipment because they were expected to leave the country assoon as they were no longer needed .87 The lastUnited States technician left in 1982 after his tour as

Plant Manager ended.88 From the renewal of itslicense in 1982, through the date the plant wasclosed, December 6, 1984, the Indian governmentallowed no American technicians or engineers towork within the plant.89 Prior to 1982, Americanengineers were licensed by the Indian governmentfor short perods of time.90 While working in India,Americans were expected to train Indian replace

ments.91Information via mass communication is difficult

to distribute to the Indian population because themajority of Indians are poor farmers.92 Educating theIndian people is an arduous task as they do not vieweducation as a priority.93 These problems proved tobe significant in the strategic management plan ofaction for the Union Carbide subsidiary.In essence, the operating environment in India,for various reasons, was woefully inadequate interms of safety, land use, and environmental controlsto prevent the disaster four years ago. Apparentlynothing has not changed since the disaster. In theUnited States, we are accustomed to rules andregulations regarding safety and environmental con


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trol which are more strictly enforced and, in theopinion of some, overzealously enforced, even to thedegree of being totally cost prohibitive. Governmentagencies like the EPA, OSHA, FDA, HEW, and apanoply of other regulatory structures designed toprotect the public which Congress in itswisdom hasbrought into being, and which Americans take forgranted, all the while complaining about their existence, simply do not exist in any effective form in

many Third World Countries.In weighing all strengths, weaknesses, opportunities and threats of the Union Carbide ? Bhopaltragedy, it is evident that the external threats, andinternal weaknesses far outweighed the company'sstrengths and opportunities. Therefore, in hindsight,these difficulties obviously contributed significantlyto the Bhopal tragedy. However, even more significant is the fact that the situation audit would bealmost the same today because nothing has changedas a consequence of the Bhopal tragedy. Furthermore, the legal complications appear to be a disasterof equal or greater proportions.

Evidently, Union Carbide has emerged unscathedfrom the tragedy, except for the lingering dilemmaof unresolved lawsuits. The New Union Carbide isslowly rebuilding its organization.94 The current

CEO, Robert Kennedy, is attempting to grow fromwithin and become the catalyst needed for a comeback.95 Mr. Kennedy has revamped his organizationin an attempt to cut fat, eliminate a stifling bureaucracy, and improve efficiency, not necessarily boostprofits .96 Kennedy is attempting a new spirit atCarbide, despite the financial strains of the Bhopalaccident.97

Union Carbide is still amajor international corporation with considerable financial strength, largelyunaffected by this disaster. With $200 millionworth of insurance for Bhopal and about $200

million in reserves set aside, Carbide no longer fearsa big earnings hit. But the ultimate size of theliability remains in doubt .98 India is still India ? acountry with a remarkably rich heritage from thepast, burdened with staggering problems in thepresent.99 Regulations are still lax and courts arestill unwilling to recognize serious crimes involvingviolations of enviromental regulations.100 Lawyersare still considered vultures following ambulances.101The citizens of Bhopal still suffer.102 And, similaraccidents may be waiting to happen.

International public relations managinginterests

If it works, don't fix it is a management maximcommonly held and Union Carbide's continuedexistence is evidence that they have successfully

managed their international interests to their benefitat least enough to remain in existence.

A complex environment

Finding solutions consistent with the value systemsand public attitudes of India and the United Stateswas, and is, the crux of Union Carbide's dilemma .103Union Carbide is involved with many local andforeign laws, regulations, and court jurisdictions inthe aftermath of the tragedy.104 The company'scontinued success depends on its ability to cope withthis network of interrelated government policies.105

Clearly, Union Carbide needed a thorough familiarity with political currents and key politicians in

Bhopal, in India, and in the United States if itwas toweather the storm produced by the chemical leak.106Multinational companies must consider their hostgovernments as influential institutions to be reckonedwith. A host government has the power to influence, control, or completely take over the operationsof a company operating on its soil .107The complex web international companies mustoperate within is extremely problematic. The business-government-society relationship applies individually to each subsidiary . . . located in everyforeign country, as well as the parent corporation.Each multinational firm must develop appropriatestrategies and policies for working with these com

plexities .108 Investment beyond the home jurisdiction ismuch more than a step across a geographicline ;109 it is a quantum leap across different culturalmilieus. A company ignores this cultural reality at itsperil. The company must act within the laws of thenation, and its behavior must be considered acceptable and safe by groups in the affected society.Where religious, social, or political systems of twonations vary widely, as occurs between the UnitedStates and India, managers of local subsidiaries ofmultinational enterprises may be faced with a choicebetween loyalty to the parent company or maintaining cultural values.110


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The company's interests

Aside from the financial ramifications, Union Carbide's management expressed a desire, along with

many observers, that a quick and fair settlement ofthe legal claims of the victims would serve thecompany's [Union Carbide's] needs far better thanprolonged and expensive litigation ,111 and the authors believe this should be considered a publicrelations necessity. Several issues were raised thataffect the public policy relationship for the chemicalindustry worldwide.112 Procedures regarding foreigninvestment and operations in a foreign country are

necessary and should be in place prior to a tragedy ofthismagnitude.

The public's interests

The public wants business to find a workablebalance between industrial production and nature'slimits , to act quickly and openly to prevent oralleviate human suffering .113 The complexity andseriousness of social structures limits the ability,skills, and effectiveness of any single organizationto operate effectively. The American public, theauthors believe, have an interest in American companies maintaining workable international relationswith other nations. Like it or not, Union Carbide is arepresentative, an ambassador, of the United Statesto the rest of the world, and accordingly the mannerin which this matter is governed will affect thepublic relations image of the United States as a

whole, either positively or negatively. Union Carbide, being international ambassadors for the UnitedStates, at present, are portraying the image of theUgly American rather than a responsible ambas

sador.

India's interestsAs a whole, India and its society have experiencedmajor difficulties in coping with the problems posedby modern international business . . . and nowherecan that be seen more than in Bhopal, where thetragedy of the world's worst industrial accident 114lingers today. Many inhabitants, possibly 10 000?20 000 experienced eye injuries, including ulcers on

their corneas, and their eyes remain sensitive tolight.115 Victims must walk amile or more, and standin line for hours, for the privilege of seeing a lessthan competent doctor.116 Medical services promisedhave not materialized. The poor are now poorer thanever.

The Indian government has taken an active rolein attempting to resolve the issues, even though theymay be partially responsible for the accident.117 TheIndian government failed in its efforts to have thecases handled in the United States, and is now facedwith the administration of justice in India concern

ing the claims of the injured parties. The amount ofrecovery is substantially reduced in value because ofcultural differences regarding the value of life andinjuries.

The distinction in damage awards, therefore, should beexplained in terms of the cultural and social standards ofthe two countries and not in terms of [legal] doctrinaldifferences. The Indian victims can fairly and justly becompensated in their own country according to thecultural standards that ordinarily affect their everydaylives. India has standards of living, wealth, values, andbeliefs that are vastly different from those in the UnitedStates.118

Multinational interestsThe leak of MIC gas generated concern worldwideabout a variety of long-term issues. Union Carbidecalled for an immediate worldwide ban on theproduction and shipment of poisonous material.119At the Woodbine, Georgia plant, Union Carbidecontinues to make Temik, using MIC shipmentsthat were turned away from ports in Brazil andFrance.120

The Brazilian state governments of Rio de Janeiroand Sao Paulo banned shipment, storage, and production of MIC after the Bhopal accident.121 Severalcompanies, including the French subsidiary toUnionCarbide, are investigating ways of producing pesticides without using MIC.122 Any further manufacture of MIC by Union Carbide was halted, both at

Bhopal, and its sister plant in Institute, West Virginia.123 Union Carbide's chemical plant in WestGermany was bombed by terrorists three days afterthe Bhopal accident.124 Throughout these international incidents, the company claimed itwas a victim


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of circumstances and sabotage.125 In 1985, UnionCarbide made the formal announcement that due toa decline in profitability of its subsidiaries, it wasplanning retrenchment.126

Despite all the immediate furor over the accident,there do not appear to be any major multinationaltreaties arising for long term resolution of theseissues.

Financial ratio analysis

The conclusion is inescapable 127 . . . just as thegas was. International business strategies need toinclude not only business but also social goals.

Corporate strategic planning hasa

greater chance ofsuccess ,128 and the public tends to accept thecorporation, when business executives are aware ofthe broad social environment 129 in which theyoperate. Corporate social responsiveness is the ability to positively interact and impact with the surrounding environment .130 Environmental analysis isan indispensable tool of strategic management. Central management should strike a balance betweenthe competing demands of stakeholders and thefirm's profit-seeking goals 131 although one of theauthors questions whether any efforts to strike abalance ever occurs.

Until the Bhopal accident, Sevin was consideredthe # 1 selling insecticide.132 The worldwide insecticide market was sluggish133 and Union Carbidepredicted a decline in profits for 1984.Union Carbide was successful in restoring itsstockholders' confidence by responding to theirconcerns regarding the disaster.The following Financial Ratio Analysis is important to distinguish financial changes made by thecompany from 1984 to 1986.In the aftermath of the disaster, Union Carbide'sstock price fell.135 During 1985, the company wasforced to repurchase stock to prevent a hostiletakeover by the GAF Corporation.136 In 1985, UnionCarbide suffered a $581 million loss, restructuredtheir assets, and increased debt. The majority ofcompany debts became long-term. However, by1986, the corporation recorded its largest net incomeever and seems to have weathered the crisis.137

TABLEIFinancial ratio analysis

1986 1985 1984

LiquidityCurrent ratioQuick ratio

ActivityInventory turnover

Aver, collectionperiod

Fixed asset turnoverTotal asset turnoverAccounts receivable

turnover

LeverageDebt ratioDebt-to-equityProfitabilityGross profit marginNet profit marginReturn on invest

mentReturn on equity

1.28 Times 1.43 Times 1.88 Times0.89 Times 0.94 Times 1.00 Times

8.50 Times 6.50 Times 6.15 Times

61.58 Days 65.93 Days 57.25 Days1.45 Days 1.34 Times 1.49 Times



86.70%*653.30%

31.50%7.80%

6.60%*49.40%

91.90%114.00%

29.40%( 8.08%)( 6.70%)(83.40%)

53.00%114.00%

29.50%3.40%

3.10%6.60%

* Increase due to purchase of Treasury Stock in the amountof $2.222 million. (134)

International legal and managementstrategies

The reactive strategy of Union Carbide after discovering the accident was to call an immediate halttoworldwide production and shipment of poisonouschemicals. This measure was taken to ensure safetyprocesses were fully operational at their plantsworldwide but while disclosing to the public that thechemical was not essential to the production of the

main product of the plant.138 In the wake of fearfollowing the disaster,139 the company's public relations strategy stressed the industry's excellent safetyrecord and efficient safety procedures in an attemptto overcome the poor publicity the company wasreceiving from the tragic acccident.While neither Union Carbide Corporation in theUnited States, nor Union Carbide India, Ltd. willadmit legal guilt, Union Carbide India, Ltd. hadadmitted moral guilt.140 For this reason, the com


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pany decided a quick response to the accident wasnecessary and should be done in three phases:

* Immediate responses,* Intermediate responses, and*Long-term

relief efforts.

Union Carbide's immediate relief efforts includedtrips to Bhopal, sending medical relief teams, offering contributions to the Bhopal Relief Fund, andsupplying medicine and equipment.

Following these steps, the intermediate needswere handled through the firm's Employee ReliefFund, a Bhopal Eye Center and additional medicalsupplies. The company contributed $1 million to theVictims'Relief Fund.141

The long-term relief efforts were aimed towardmeeting health and welfare needs of the survivors.Union Carbide offered to build dwellings, job training centers, and schools. The company began to planto correct the safety deficiencies.After seventeen years without a reported incident,Union Carbide officials were forced to admit toseveral other similar incidents occurring at its plantin Institute, West Virginia.142 The company admittedto twenty-eight relatively harmless incidents at itsvarious plants.143 These accidents, forced the company to concede carelessness in its domestic operations.144

Union Carbide attempted to generate a level ofpublic respect in the days immediately following thedisaster by implementing a reactive crisis management plan that portrayed genuine company concernfor the victims. Warren Anderson flew to India

within hours of the accident and made himselfavailable to hundreds of reporters .145 He stated, thisis a responsible company and we want to do theright thing for the people of Bhopal, our share

holders and our employees .146Lack of reliable information and communicationnetworks hampered Union Carbide's managementin its attempt to effectively manage the crisis; vitalinformation was missing or withheld.147 Because theaccident occurred so far from company headquartersin Connecticut and because communication wasvery difficult due in part to the chaos and confusioncaused by the accident, the company tended to beoverly cautious in its relations with the media. An

impression was created that the company was notbeing forthright about the accident's cause or thecompany's accountability .148In this thin information atmosphere, unlike thatfound in the industrially advanced United States, thecompany encountered great difficulty in managingthe crisis. With vital information missing, UnionCarbide found itself vulnerable to public criticism.149Officials of Union Carbide refused to speak tomembers of the media and became overly cautiousabout discussing the accident outside the realm ofthe company. In the days immediately following thecrisis, Warren Anderson lost credibility with the

media, and subsequently the public.150 Union Carbide was viewed as failing to disclose valuable information, instead of attempting to handle a crisis withdignity.151The company fought for its life. Claims werestonewalled in court. In addition, the companyrefused to accept responsibility for its action, apparently under the guidance of its insurance carrier. Thevictims' cases went unsuccessfully all the way to theSupreme Court of the United States.152

Legal responsibility - the second tragedyUnion Carbide Corporation won its greatest victorywhen the United States Supreme Court held that theclaims of the victims would not be heard inUnitedStates Courts on the grounds of forum non-conveniens.153 Forum non-conveniens refers to the discretionary power of a court to decline jurisdictionif, in the interest of justice, and the convenience ofthe parties, the court considers that the case should

proceed in another court or jurisdiction.154 In thiscase, almost all of the witnesses, the injured parties,the physical evidence, and the social impact of theaccident were all in India, therefore, applying thedoctrine of forum non-conveniens the court heldthe case should be tried in India. This is such avictory for Union Carbide because compared to thecompensation for injuries which could have beenobtained in the United States, the compensation forinjurieswhich might be obtained in Indiawill be amere pittance.155 There has not been a wrongfuldeath judgment in India of more than $40 000 156Lawyers for the victims argue that bigger ? and


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448Clayton Trotter et al.swifter ? awards are given in American courts, as

juries are experienced in judging mass-disastercases.157 The cases were, in effect, sent back to Indiafor trial.

Concerning the Indian proceedings, an originalinterim order was entered by Judge M. K. Deo inBhopal, India in 1987 awarding $270 million forinterim relief, but this was reduced to $192 millionin April 1988, in accordance with an AppellateOrder entered by Judge S. K. Seth of the MadhyaPradesh state appellate court.158 Surprisingly, JudgeSeth apparently removed Judge Deo from the caseafter affirming Judge Deo's decision.159 The removalof Judge Deo which occurred in the middle of

October, 1988, is another victory for the UnionCarbide Corporation but it was not known ... ifDeo's removal will affect the interim relief .160 So,apparently, four years after the accident, there is stillno certainty of financial relief accorded the victimsof the disaster. Judge Deo believes Union Carbide

Corporation liable for the accident, or he would nothave granted interim damages.The plaintiff, Union of India, on behalf of thevictims, in its pleadings stated:

The enterprise owed an absolute and non-delegatableduty to the community to assure that no harm wascaused to anyone

on account of the hazardous andinherently dangerous nature of the activity it had undertaken.161

The Appellate Court 0udge Seth) cited,with approval, the decision of the Supreme court of India inM. C. Mehta's Case involving a much less dangerouschemical substance namely oleum gas , while the

Bhopal suit involved escape of an ultra-hazardouschemical substance namely Methyl-Isocyanate .162English law is the basis for American law, as wellas the basis of Indian law. At the common law, the

theory upon which the Indian court apparendy triedto allow recovery would be termed strict liability intort.163

The early English common law apparently applieda strict liability type rule undoubtedly supported bythe feeling in law that he who breaks must pay .164While a strong move later appeared in the law tonever impose any liability without fault or negligence, the doctrine of strict liability is still very mucha part of our jurisprudence.The doctrine has been long applied tocases

involving domestic or wild animals. The owner isheld liable if the animal, be it bear or bull, escapesand does personal injury or property damage. Thehistory of the doctrine of strict liability for abnor

mally dangerous things and activities or ultra-hazardous activities seems to begin with what is known asthe rule inRylands v.Fletcher.165In the Rylands case, the defendant constructed awater reservoir on their land which was situated in acoal mining region. The water escaped through anabandoned mine shaft to an active mine which wasflooded causing great loss. The defendant landowner was held liable. The case appeared to settlethe doctrine that a non-natural, abnormal, extraordinary or ultra-hazardous activity would create asituation, if injury occurred, where the owner of theland would be held strictly liable for damages.166

Apparently, in at least three American jurisdictions,the doctrine has been applied to situations involvingthe emission of smoke or toxic gases by a factorylocated within a populated area.167More recently, Prosser and Keeton point out thatthe Restatement of Torts 2nd applies strict liabilityin tort to: ultrahazardous activity undertaken by adefendant: such activity is one which necessarilyinvolves a 'risk of serious harm' which 'cannot beeliminated by the exercise of the utmost care' .168The basic legal concept cited by the IndianJudgesis quite similar to that found in American law. Strictliability in tort is used most often in situations whereinjuries result from an ultra-hazardous activity engaged in by a party (i.e. blasting with dynamite or thekeeping of dangerous animals), or in situationswhere an unreasonably dangerous product is placedon the market by a manufacturer and someone isinjured through the use of the product. Since the

party to be held strictly liable has exclusive andabsolute control of the production process or theactivity, the party injured by the product doesnot need to prove negligence, but merely that thedefendant placed on the market an unreasonablydangerous product or that the activity was ultrahazardous in nature and that the plaintiff suffereddamages as a result.169Strict liability in tort would probably permitrecovery even in the event that there was a disgruntled employee that committed sabotage .There have been cases where a dog was entrusted bya defendant owner to an employee to walk, and


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during the walk, the employee intentionally releasedthe dog to attack the plaintiff. The intervention ofthe intentional act of the employee did not precluderecovery against the owner of the dog.170 The partythat has exclusive control over hiring and staffing ofan ultra-hazardous

activityis

responsible,and if an

innocent third party was injured, the party is liable ?not because of fault or negligence, but due to theultra-hazardous nature of the activity.Union Carbide Corporation could be held direcdyliable to one of the injured third parties if the courtholds that the Indian corporation was a sham oralter-ego of the parent (i.e. it had no independentexistence or authority.) Apparently, this has beenheld by the Indian courts, and will ultimately makeUnion Carbide directly liable for whatever verdictsare awarded.171Union Carbide and the Indian government mayalso have been negligent for allowing people toconcentrate near the plant. No responsible corporation or government should allow any group ofpeople to congregate on the private property of thecorporation. Each plant should have a vacant zone ,

whereby a designated number of miles between theplant and the nearest village exists.172What has been termed The Iron Law of Responsibility states that in the long run, those who donot use power inways that society considers responsible, will tend to lose it .173While not a legaldoctrine it seems to apply in this case. Apparently,the Iron Law of Responsibility has been avoidedby Union Carbide, but perhaps not by certain employees.On November 16, 1988, the magistrate of Bhopal,India issued a warrant for the arrest of the formerChair of the Board, Warren Anderson, and twocompany officials and the manslaughter and othercharges mentioned previously were increased tofelony murder charges.174Union Carbide Corporation claims the Indian

magistrate has no jurisdiction overWarren Anderson,or the Union Carbide Corporation.175Four years after the accident on December 4,1984, in a pathetic display of powerlessness and

hostility, the Bhopal plant was stormed by demonstrators throwing rocks,176 Apparendy, most of thedemonstrators consisted of survivors of the tragedywho still suffer from the effects of the toxic methylisocyanate which leaked from storage tanks.177 Not

only have the loss of family and loved ones devastated the survivors, but their livelihood has beenremoved as the plant continues to remain closed,178and litigation drags on.Will corporate responsibilitybe established? Perhaps, the courts will decide thisissue . . .within another four years.

Public relations recommendation

While an accident of the magnitude of Bhopal wasprobably totally unforseeable by the management ofUnion Carbide, accidents of some degree of magnitude are clearly foreseeable by all chemical manufacturers. Accordingly, the Bhopal disaster may beconsidered an exceptional example of ineffectivecrisis management and poor media relations, duringand immediately following the accident. Due to theinability of Union Carbide's management to antici

pate an emergency of this magnitude, failure toimplement an effective crisis management teamprior to the accident, and inability to effectivelydisseminate information, Union Carbide lost substantial credibility with the public. For example,sending Warren Anderson, the Chair of the Board ofUnion Carbide Corporation to Bhopal, proved to bea public relations error, becoming apparent whenthe Indian authorities arrested him and advised himto leave the country for his own safety.179An effective crisis management team should havebeen prepared to take the responsibility of discussingmatters with stakeholders such as employees, managers, citizens, creditors, and the media. This teamshould have consisted of doctors and medical personnel prepared for an emergency and public relations personnel to field questions by the press. Allother employees should be prevented from discussingtheir interpretation of the facts surrounding anyaccident. The team would be ready to implementtemporary hospital facilities. If an effective crisis

management team had been created before theBhopal disaster, the plans of the team would havebeen implemented prior to becoming a public relations disaster.

Union Carbide has previously experienced minoraccidents at its other chemical plants180 and shouldhave recognized the potential for a greater disaster. Acrisis management team would know who to contactto make certain the company was represented in a


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positive manner. The combination of errors surrounding the Bhopal accident made the tragedyappear worse. Perhaps the reputation of the company would not have suffered as extensively had itdeveloped a public relations crisis management teamafter its first minor accident in the United States.

In retrospect, Union Carbide has instigated aChemtrek ? HELP System 181 for use in handlingchemical leaks or spills. The system is specificallydesigned to bring Carbide experts to the scene of theaccident, make direct contact, and instigate containment and safety operations.182 The tremendousworldwide ramifications of the Bhopal tragedy mayprove to be useful in alleviating future chemicalproblems of this magnitude.183It has been suggested that the government ofIndia hire a Victim's Advocate I84 who could helpthe many victims who have yet to master the linguistic and bureaucratic problems of the Indian legalsystem. The victims would receive assistance in

making their presence known, and filing of theirclaims.185

The plant in Bhopal should be rejuvenated andre-opened. Where competitive pressure precludessocially responsible action, the business needs torecognize that its lack of operation in Bhopal isdepleting social capital and, therefore, represents aloss. Attempts should be made to restore profitableoperation through better management.The tragedy in Bhopal is not only the loss ofthousands of lives, but the loss of any financialstability Union Carbide brought to the inhabitantsof Bhopal. The second tragedy is the unresolvedlawsuits. Yet, it is possible for Union Carbide toregain its credibility as a leader in the pesticidesindustry.To understate the obvious, the reputation ofUnion Carbide has been tarnished. However, Union

Carbide could be given a second chance by provingthat it can be socially responsible. Although UnionCarbide has monetary financial rewards, it has yet toachieve trueprofits in the sense of moral responsibility. A company that is not socially responsible is stillin debt... to society.186 Even ifUnion Carbide paysfor all the judgments entered in Bhopal courts, theyare still in debt morally... to Bhopal.From the social responsibility perspective outlinedabove, and in the legal arena, the management of thecorporation could move to provide settlement

amounts two, three or four times as much as thatwhich might be legally awarded, on the grounds ofmoral or natural law.While the corporation is not

legally bound to pay damages in those amounts because punitive damages are not awarded in Indiancourts, the managementof the corporation,

as therepresentatives of the best interests of their stockholders, should truly make the relief of the disastervictims their highest priority .187The effects of the disaster will be felt worldwidefor generations to come. Perhaps a corporation,which is a separate legal entity with a potentiallyinfinite existence, could commit itself to the continued care and relief of the victims. Union Carbidecould still turn the world's worst industrial accident 188and largest civil lawsuit in history into thegreatest example of corporate generosity and philantrophy in history.

Conclusion

Preventing and coping with an industrial accidentrequires the will to change on the part of all stakeholders, alternative ways of resolving disputes,compensating victims, and initiatives to ensurefuture safety is accepted by all stakeholders. Publicactivism to motivate corporate and governmentchange is also necessary.189 Appropriate responses tothe above considerations are mandatory for eachgroup, thus allowing each to appreciate the uniquesituation of the others. Without a doubt, the preservation of lives should remain a top priority in anyorganization handling hazardous materials.The accident may serve to strengthen laws circumvented by the courts .190 Prospects for tougherlaws regulating pesticides were parctically nil beforethe Bhopal accident, while in the recent past, India,

Malaysia, Peru and Brazil have imposed industrywide controls on the petroleum, mining, petrochemical and pharmaceutical industries.191The Reagan administration increased the testingrequired under the law that governs the productionand use of hazardous chemicals.192 The debate overthe Occupational Safety and Health Administrationwas reignited, and the Reagan administration intensified their efforts to get laws that would giveworkers more information about hazardous chemicals they might be exposed to .193 The Bhopal


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tragedy also strengthened proponents of a proposalto toughen the Clean Air Act.194Experts have repeatedly stressed that businesscannot escape the complicated social environmentwithin which it must work. The day-to-day deci

sions, as well as efforts to plan strategically for thefuture, are totally dependent upon knowledge of thesocial and cultural milieu inwhich the business mustoperate. The United States has the ability to handlethe destruction caused by earthquakes and freeway

mishaps, yet is unable to deal with a tragedy such asthe Bhopal accident.195 Union Carbide learned alesson at a great expense.For the first time in peacetime history, almost anentire town was gassed .196 No political party, notrade union, no social organization of any consequence [including Union Carbide Corporation] hastaken up the victims' cause with any degree ofpersistence .197 The victims are truly poverty stricken,with no history of social organization, and no significant political experience. The accident at Bhopal hasbeen treated as a local mishap rather than a nationaltragedy.198

Perhaps now that almost four years have passedsince the occurrence of the accident, some entity,perhaps the Indian government, the United Statesgovernment, some private relief agency, or even theparent corporation, Union Carbide, will answer thecall of the second tragedy of Bhopal and become theresponsible party, doing the right thing for thepeople of Bhopal, the shareholders and employees .199

A call for congressional actionIn other areas of the law, primarily tax and bribery,the United States government has felt no restraint in

passing laws to tax the overseas earnings of Americancompanies, or to prevent bribery of foreign officialsor members of foreign political parties.200 Surely in

George Herbert Walker Bush's kinder and gentlernation ,201 Congress and the President of the UnitedStates would not mind working out a law requiringminimum health and safety standards in the operation of partially owned or wholly owned foreignoperations and a law granting foreign aid to relievethe citizens of Bhopal who were affected by aU.S.based multinational's international operations.The fact that the lawsuits remained unresolved

has created a second tragedy, and a glaring international issue which needs resolution. The longer theresolution of the lawsuits is postponed, the less likelythe victims of the disaster will be able to obtain anysignificant recovery202 to come close to compensating for the loss of lives and health of the citizens ofBhopal, and the more the ugly American is per

petuated.

Notes

1 The Last Lion ? Winston SpencerChurchill ? Visions ofGlory,1874-1932, W. Manchester, p. 841.2 See Index of Legal Periodicals. For example, The Bhopalincident:how the courtshave

faced complexinternational

litigation.Richard Schwadron. 5 Boston University International LawJournal 445?481. Fall '87.Parenspatriae and theUnion Carbidecase: the disaster at Bhopal continues. Lisa Moscati Hawkes. 21Cornell International Law Journal 181?200 Winter '88.Caninternational lawprevent anotherBhopal tragedy?(Leonard v B.Sutton Award Papers) by Todd Howland. 15Denver Journalof International Law and Policy. 301?316 Winter-Spring'87.3 India seeks arrest of three in blast, Lubbock Avalanche

Journal, Nov. 16,1988, p. A-3.4 Hundreds stormUnion Carbide plant, Lubbock AvalancheJournal, Dec. 4, 1988, p. A-13.5 From private conversations between R. Clayton Trotter,one of the authors, with John H. Wood, Jr., U.S. DistrictJudge while working as Judge Wood's Law Clerk (1978?

1980).6 Union Carbide of India Ltd.: The Bhopal Tragedy, A.Sharplin and reprinted Frederick, Davis and Post, Businessand Society-Corporate Strategy, Public Policy, Ethics, 6thEd, p. 839 (1988).7 Id. p. 767.8 Supra, Note 6, p. 839.9W. Stevens, Gas Leak Death Rate Dips; More Hopeful

Outlook Seen, NYTimes, Dec. 9, 1984, p. 22, col. 1.10D. B.Magraw, The BhopalDisaster:StructuringaSolution,U.Colo. L. Rev., Vol. 57, p. 835.1* In Re: Union Carbide Corporation Gas Plant Disaster atBhopal, India inDecember, 1984; the Plaintiffs in all cases. .. except the Union of India v. Union Carbide Corporation,No. 85 Civ. 2696 and except those cases consolidated asshareholders or derivative cases by EXECUTIVE COMMITTEE MEMBERS, STANLEY M. HENSLEY and F. LEEBAILEY, and THE UNION OF INDIA, v. UNION CARBIDE CORPORATION. 809 F. 2d 195; 89 A.L.R Fed. 217;

17ELR20580.(2dCir. 1986).


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452Clayton Trotter et al.12 L. F. Butler, Parens Patriae Representation in Transnational

Crises: The Bhopal Tragedy. Cal. Western Int'l LawJ., p. 185.13 S. Cummings, International Mass Tort Litigation: Forum NonConveniens and theAdequate Alternative Forum inLight of theBhopal Disaster, Ga. J. Int'l and Comp. L., Vol. 16, p. 115.14Union Carbide of India, Ltd., A. Sharplin and reprintedPearce II and Robinson, Jr, Strategic Management, StrategyFormulation and Implementation, p. 772 (1988).15 Bhopal, The Guardian, Dec. 15, 84, as reprinted under P.5. Jha and J. Elliott, Bhopal,Wd Press Rev, Feb. 85, Vol. 32,Pg.54,Col. 1.16Why Carbide says itwas 'a deliberateact' at Bhopal, Chem

Wk,Nov.26, 1986, p. 9.17Union Carbide ? Annual Report 1984 AfterBhopal p.3.18Carbide execs: 'We thinkwe canhandle this\ Chem Wk, Jan2-9, 1985, pp. 6-7.19

5?pra,Notel7,pp.6-18.20 Id. p. 2.21 Supra, Note 6, p. 838.22 Id.23 Id.24 Id.25 Id.26D. Colton, India poison toll tops460, USA Today, Dec 4,1984, p. 1,4A27 Supra, Note 6, p. 838.28 Id.29 Id. p. 839.30 D. Colton. Gas leakkills hundreds inIndia,USA Tdy, Dec6, 1984, p. 1 .31 Supra, Note 14, p. 768.32 Swpra, Note 9.33 Supra, Note 6, p. 839.34 India hurries to bury 1200 disastervictims,USA Tdy Dec. 6,1984, p. 2A.35 People of India Struggle Toward Appropriate Response to

Tragedy, C&EN, Feb. 11, 1985, p. 16.36 Indiansfear 1,700moreBhopal deaths,Lubbock AvalancheJournal, Apr. 29, 1988, p. 12-A.37 Supra, Note 6, p. 846.38 J. Pearson and L. Helm. ForMultinationals, ItWill Never Be

The Same, Bs WK, Dec. 24, 1984, p. 57.39 Supra, Note 6, p. 846.40 T. Gest, K. Sheets, R. Taylor, As Lawyers Move In on India'sTragedy,US Nws &Wld Report, Dec. 24, 1984, p. 26.41 R. L. Stein, The Settlement ofEnvironmentalDisputes:TowardsA System ofFlexibleDispute Settlement, Syr.J. Int'l. L. & Com.,p. 295.42 Supra, Note 13, p. 113.43 Bhopal,Wd Press Rev,Mar. 1987, p. 56.44 Id.45

Supra,Note 41, p.

296. Also note the firm of Robins,Zelle, Larson and Kaplan as mentioned in the footnote.

64

46 Supra, Note \3,?. 119.47W. Lepkowski, People of India StruggleTowardAppropriateResponse toTragedy,C&EN, Feb. 11, 1985, p. 18.48 Supra, Note 40.49 Supra,Note\7,$.4.50 Id.51 J. Elliot and P. S.Jha, Bhopal,Wd Press Rev, Feb. 1985, p.54(1).52 Supra,Note\7,p.4.53A Backlash IsThreateningChemicalMakers, BsWk, Dec. 24,1984, p. 60.54 Supra, Note 17, p. 28.55 Annual Reports, Union Carbide Corporation, 1984?1987.56 Id.57 A New Union Carbide isSlowly StartingTo Gel, BsWk, Apr.18, 1988, p. 69.58 Id.

59 Supra, Note 6, p. 845.60 Id.61 Id.62 Supra, Note 17, p. 4.63 Supra, Note 14, pp. 775-776.

Id. p. 776.65 Id.66 A SmallWhiff ofSabotage,Time, Aug. 25, 1986, p. 49.67%?ra,Notel6.68 Id.69 Id.70

Id.71 Id. p.9, coll.72 Supra, Note 66.73 B. Crossette, IndonesiansSeekA CarbidePledge,NY Times,Dec. 9, 1984, pg. 22, col. 6.74 Supra, Note 6, p. 845.75 Supra, Note 15.76%>ra,Notel7,p.5.77 Encyclopedia Americana, International Edition, p. 865.78 Id. p. 894.79 Supra,Note\7,p.5.80%>ra,NotelO,p.847.81 /?p. 837.82 Supra, Note 14.83 K. Ramakrishna, The Emergence ofEnvironmentalLaw in the

Developing Countries: A Case Study of India, Ecology LawQuarterly, Vol. 12, p. 993.84 Id. pp. 993-994.85 Supra, Note 10, p. 835.86 Supra, Note 15.87 Id.

88 Id.89 Supra, Note 6, p. 844.90

Supra,Note U, p. 775.91 Id.


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Bhopal, India and Union Carbide 45392 Supra, Note 73, p. 894.93 Id.94 Supra, Note 57, p. 68.95 Id.96 Id.97 Id.98 Id.99 Supra, Note 73, p. 894.100 Supra,NoteS3.101 S?^w, Note 40.102 S?/>ra,Note41,p.296.103 Frederick, Davis and Post. Business and Society ? Corporate Strategy, Public Policy, Ethics, 6th Ed, p. 8 (1988).104 Id. p. 1.105 Id.

106 Id.107 Id. p. 442.108 Id.109 Id. p. 441.11 Negandhi, InternationalManagement, p. 159(1987).m Sw/?ra,Notel7,p.4.112 Id.1,3 Supra, Note 103, p. 470.114 Supra, Note IS.115 Supra, Note 30.1,6 S^ra,Note43.1 7 S?/?ra, Note 13, p. 120 and footnotes.118 Id. p. 166.1,9 Supra, Note 30.120

%>ra,Note26.121Pesticide makers begin toadapt inBhopaVswake, Chem Wk,Jan. 23, 1985, p. 8.122 Id.

123 Sw/?ra, Note 26.124%>ra, Note 34.125 Sw/>ra,Notel6,p.8.126M. Cherniack, The Hawk's Nest Incident, p. 109 (1986).127 St^ra, Note 43.128%>ra,Notel03,p.478.129 Id.130 Id. p. 466.131 Id.132 Supra, Note 121.133 Id.134 Sw/?ra,Note55.135 Supra, Note 57, p. 68.136 Id.137%>ra,Note55.138A. Pollack, Chemical Used At Indian Plant Was Not Vital,

NY Times, Dec. 9,1984, p. 8.139 Supra, Note 53.140 Supra, Note 35, p. 18.141 D. L. Wilcox, P. H. Ault, W. K. Agee, Public RelationsStrategies andTactics, p. 386 (1986).

142 Supra,Note26.143 Supra, Note 126.144 Id.145 Supra, Note 141.146Town Proud of Industry,USA Tdy, Dec. 5, 1984, p. 24.147 S?/?ra,Notel03,pp.8-9.148 Id.149 Id.150 Id. p. 383.151 Id.152 Id.153 Executive Committee Members, et al v. Union of India

and Union Carbide Corporation; Union of India v. UnionCarbide Corporation, et al, 108 S.Ct. 199; 98 L. Ed. 2d. 150(1987).154See Gulf Oil Corp. v. Gilbert, 330 U.S. 501 (1947), PiperAircraft Co. v. Reyno, 454 U.S. 235 (1981). See also Black's

Law Dictionary, p. 589.155 Supra,Note 41, p. 296.156 Id.157 Id.158Indian judge removedinBhopal case,Lubbock Avalanche

Journal, Oct. 16, 1988.159 Id.160 Id.61 Order of Judge Seth, Apr. 29, 1988. Copy excludingcitation provided by Union Carbide Croporation in possession of authors. Available upon request.162 Id.163 See generally Prosser and Keeton on Torts, 5th Edition, p.534 etseq, 1984.164 Id. p. 535.165Fletcher v. Rylands, 3H & C 774, 159 Eng. Rep. 737(1865).166For a discussion of different types of abnormal activity,see Prosser and Keeton on Torts, p. 546. Supra, Note 36, at537, and Prosser's footnotes.167 Susquehanna Fertilizer Co. v. Malone, 73 Md. 268, 20 A.900 (1890), Frost v. Berkeley Phosphate Co., 42 S.C. 402, 20SJB.280 (1894);Holman v. Athens Empire Laundry Co., 149Ga. 345, 100 SR 207 (1919).168Restatement (Second) of Torts, Sections 519, 520 (1965).169 Supra, Note 166.170Baker v. Snell, 2KB. 852, 825 (1908).171 Supra, Note 161.172 Supra, Note 10, pp. 840-843.173%>ra,Notel03,p.36.174 Supra,Note3.175 Id.176 Supra, Note 4.177 Id.178 Id.179%>ra,Notel03,p.383.180 Supra, Note 126.


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454Clayton Trotter et al.181

5wpa,Notel7,p.5.182 Id.183 Id.184 5?^ra,Note41,p.296.185 Id.186 G. E. Sawyer, Business and Society: Managing Corporate

Social Impact (Boston:Houghton Mifflin, 1979), p. 401.187 Supra, Note 141.188 Sw/?ra, Note 43.189P. Shrivastava, Bhopal: Anatomy of a Crisis (1987). BookReviews May 22, 1987, p. 979.190 L. Rich, S. Malone, J. Schwarta and R. Gibb, The states'lukewarm response toBhopal, Chem Wk, Feb. 20, 1985, p. 26.191 Supra, Note 100, p. 40.192Ciffeli, A., An Explosion inCongress, Fortune Vol. VIII,

p. 53. Jan 7, 1985.193 Id.194 Id.195 L. Rich, S.Malone, J. Schwarta and R. Gibb, Three ambi

tious state studies, Chem Wk, Feb. 20, 1985, p. 26.196 Supra, Note 35.197 Supra,Note43.198 Id.199 Supra, Note 146.200G. C.Johnson, R. C. Trotter andM. S.Gately, The Foreign

Corrupt Practices Act: Interpretation and Compliance, PrenticeHall Corporation 1985.

201The authors take judicial notice and/or poeticlicense with respect to awell known campaign quote attributed to a presidential campaign speech of George HerbertWalker Bush, the 44th President of theUnited States.202On February 15, 1989 the government of India reacheda settlement with Union Carbide that was ordered by theSupreme Court of India for 470 million dollars or about$1500 per person injured or killed in the accident. Thegovernment of India has assumed responsibility for administering the claims of the injured and families of the dead.Even at the rate of 1per hour itwill take years to handle theclaims of 300000 people. There is some possibility thesettlement may be overturned or unraveled. At least onejudge has threatened towithdraw his support for the order.SeeWall Street Journal, Wed. Feb. 15, 1989 and LubbockAvalanche Journal, Sat. March 4, 1989. So little, so late, onlyserves to emphasize the second tragedy of Bhopal and makethe call for Congressional action the even more compelling.

Texas Tech UniversityCollege ofBusiness Administration,Box 4320,Lubbock

Texas,USA. 79409-2101

bhopal, india and union carbide

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