Union Carbide & Bhopal Case

Summary

Summarising the above timeline, we have identified the legal issues listed below. We summarised them into this framework to give a compact view of the legal coverage of this case and will discuss each of the items one by one in fuller detail in the next section.

a) Investigation of the cause of the accident

b) Litigation background

    - Parties involved

    - Choice of jurisdiction

c) Legal arguments

    - Multinational Enterprise Liability

    - Extradition

d) Result/Settlement

2. Major issues

1. Investigation of the cause of the accident

1. Investigation process

The conflicts between the Indian government and UCC began immediately after the disaster, when UCC would like to send a team of experts to investigate the cause of the accident. According to Browning (1993), Vice President of UCC at the time of the accident, UCC’s scientists and engineers who sought to determine the cause of the disaster were in a frustrating situation, as they were denied cooperation, information and access by the Indian authorities. There were several major areas of conflicts in the investigation process, hindering the process of looking for the truth.

The first conflict was investigating the plant site. The Indian Central Bureau of Investigation (CBI) had taken control of the plant and sealed it (Kalelkar, 1988), hampering the work of UCC’s investigation team (Browning, 1993).

In addition, the UCC team was barred from questioning employees at the plant, who were clearly important sources of information for the investigation. The team submitted to CBI a list of 193 plant employees whom it wanted to interview, but CBI only authorized discussion with the Plant Manager and the MIC Production Superintendent, neither of whom was on duty at the time of accident. CBI claimed that interviewing workers would constitute “tampering with evidence” in the criminal investigation (Kalelkar, 1988). This further disabled UCC’s team to investigate.

Moreover, the team from UCC had access to only those documents they knew about and specifically requested (Browning, 1993), so if the team was unaware that a particular document existed, the document would never come to its attention (Kalelkar, 1988). This would prevent UCC from conducting a thorough and fair investigation into the accident.

One more complaint from the UCC-delegated team was that CBI conducted its criminal investigation with aggressive tactics, and this led to cover-up by plant employees, because plant workers might distort or omit facts to avoid involving in criminal charges (Kalelkar, 1988).

As the accident took place in India, the Indian government undeniably had the authority to conduct investigation. The question is whether UCC should be allowed to do its own investigation. Prohibiting UCC to conduct an independent and fair investigation has only worsened the relationship between the Indian government and UCC, hampering any cooperation opportunities between the two sides in making the investigation more efficient. It might also lead to the impression that the Indian government was trying to hide up some evidence from the public. The opaque investigation process led to different explanations towards the cause of the accident. The party which ultimately suffers the most from this disagreement would likely be the injured victims of the accident, as they will never know the true cause of the disaster.

2. Explanation of the causes

The common belief on the direct cause of the gas leak is that water had been introduced into the MIC storage tank 610, causing an exothermic trimerization of MIC. This chemical reaction resulted in rapid rise in temperature and pressure, forced the pressure release valve to open and allowed the gas to leak (Union Carbide Corporation, 2010b).

However, why water would be introduced to the MIC tank is controversial. There was a variety of explanations for the cause, partly pushed by the media’s search for a quick explanation, ranging from attack by a Sikh terrorist group to management failures (Browning, 1993), and partly because the two major investigations were commissioned by different parties.

There are two major theories concerning why water has entered into the MIC tank. The investigations were sponsored and supported by the Indian government and UCC respectively.

The first explanation was about the water-washing activities in the plant. It was provided by an Indian government report, following an investigation sponsored by the Government of India, conducted by staff of scientists and engineers from the Council of Scientific and Industrial Research and other experts (Kalelkar, 1988). This theory has been favored by the Indian government, local and international trade union representatives, local activists, and transnational environmental and consumer organizations (Peterson, 2009).

This explanation indicated that various parties in the plant, ranging from workers, supervisors and the management, were responsible for the gas leak. In the process of water washing of pipes in the plant, workers did not install a slip bind into the pipe above the water washing inlet as the plant manual required. When water accumulated in the pipe and a worker shut off the water flow, the plant supervisor ordered resumption of the washing process, leading to water flowing into the MIC tank. As workers noticed MIC leak by the smell, rumbling sound in the tank, heat emanating from it, and pressure indicator far exceeding the normal range, many safety measures for preventing gas leakage were not functioning. For example, the flare intended to burn out toxic gases had insufficient capacity to burn large volumes of escaping gas. The refrigeration system to keep MIC at a low inactive temperature was shut down in June 1984. The firewater spray pipes to control escaping gases and cool over-heated equipment or douse fires had insufficient height to reach the top of vent stack (Peterson, 2009). All these problems leading to the serious gas leak pointed to poor management and ignorance of safety in the plant.

However, Union Carbide Corporation (2010b) rebutted against this explanation based on several arguments. It claimed that water washing occurred a significant distance away from the storage tanks, and there was no evidence that water had run through the connections from the washing area to the storage tanks. It also stated that process safety systems were in place and operational at that time, and would have prevented water from entering the tank by accident. All these claims were clearly aimed at dismissing UCC’s responsibilities over the disaster.

Instead, experts from the engineering consulting firm Arthur D. Little, Inc., commissioned by UCC to investigate the cause, concluded that the accident was caused by sabotage. Its investigation report explained that a large amount of water, possibly 1000 to 2000 pounds, entered the tank. Direct entry of the water by a direct connection to the tank was more likely than through the plant’s piping system (Kalelkar, 1988), indicating that the water was not from the water washing activities as described in the other explanation. Only an employee with the appropriate skills and knowledge of the site could have tampered with the tank (Union Carbide Corporation, 2010b), leading to the explanation that it was caused by sabotage from an employee of the plant.

The strongest rebuttal against this claim was that UCC never named the suspected saboteur. A worker who believed he was the suspect even publicly challenged UCC to name the suspect and denied that he had any involvement in sabotage. UCC responded by saying that the name was already known to the Indian enforcement authorities. Such claim would bring both advantages and disadvantages to UCC. On one hand, refusing to disclose the name can help UCC avoid libel suits. On the other hand, UCC’s claim would be weakened (Peterson, 2009). Without disclosing the suspect and bringing the saboteur to prosecution, UCC’s explanation will remain unpersuasive, as if UCC was creating an imaginary saboteur to bear the responsibility of the disaster.

Although a conclusion on the cause of the accident cannot be reached, an obvious observation from the arguments is that both parties were trying to put the responsibilities on to the other side. The government’s investigation blamed the poor management of the plant, while the report commissioned by UCC denied this. Neither side was willing to bear the legal responsibility or moral responsibility of the disaster, leading to continuous tension between UCC and the victims until today.

2. Litigation background

1. Parties involved

Shortly after this disaster, lawsuits concerning compensation and other issues related to this accident began to take place. Naturally, the two sides in the litigation process were the victims as plaintiffs and UCC as the defendant.

However, an interesting party involved in this case is the Government of India. In March 1985, the Indian Parliament enacted the Bhopal Disaster Relief Act. This made the Indian government the sole legal representative for all victims in the Bhopal disaster (Peterson, 2009). This has in fact contributed to the prolonged discontent among the victims who were mostly poor working class people, because they did not receive enough compensation from the Indian government after it represented them to negotiate a settlement with UCC in 1989. They have only received about US$2,223 so far for the dead and even less for survivors, which was far less than enough to cover the medical expenses as a result of inhaling toxic gas (Reuters, 2004).

2. Choice of jurisdiction

An important issue in the litigation process of the Bhopal case is which jurisdiction should be applied. Litigation has taken place in both India and the United States since the disaster until today. The disaster took place physically in India, so litigation in India is reasonable. On the other hand, UCC was a US company so legal rulings on UCC from US courts might be more easily enforced. However, court decisions so far indicate that plaintiffs have not been able to claim compensation from UCC through US courts.

The first case in the United States started in 1985. The Government of India filed a civil suit against Union Carbide in Federal District Court in New York City to claim for US$3.3 billion (Greenpeace, 2009). According to Browning (1993), the Indian government did so because it presumably hoped for a higher award or settlement than which could be expected in India. However, the US Federal District Court ruled in 1986 in Government of India v. Union Carbide Corporation that trials relating to injuries suffered in the Bhopal accident should be held in India instead because of the forum non conveniens doctrine. Forum non conveniens is a court’s discretionary power to decline to exercise its jurisdiction where another court may be more convenient to hear a case, considering factors such as location of evidence and witnesses (Legal Information Institute, 2010). The ruling by the District Court was upheld by the US Court of Appeals in 1987 (Peterson, 2009).

After this ruling by the US court, lawsuits moved back to India. UCC and the Government of India agreed to a US$470 million settlement of all Bhopal gas leak claims in February 1989 (Peterson, 2009). The details of the settlement will be further explained in a later part in this paper.

Nevertheless, even after the US court ruling to transfer all cases back to India and the settlement between the Indian government and UCC, individual victims continued to file lawsuits against UCC in the United States. However, they were generally unsuccessful in receiving claims from UCC. Several major cases were explained below.

In 1990, 2 groups of victims filed class action suits in Texas, alleging that India failed to represent them adequately because of government agencies’ ownership of UCIL stock, and therefore did not secure them sufficient compensation. However, US courts refused to review the Indian Supreme Court’s ruling because of the norms of mutual respect for court decisions. The US Supreme Court declined to review federal court decisions dismissing suits against India in 1993 (Peterson, 2009).

Another major class action suit, Bano v. Union Carbide Corporation, was filed in 2000 in US Federal Courts by Haseena Bi and other organizations representing residents of Bhopal, seeking compensation for gas-leak related injuries and for further harm from exposure to contaminants under US Alien Tort Claims Act. This Act gave US district courts jurisdiction of civil action by an alien for a tort committed in violation of the law of nations or a treaty of the United States. It was relatively dormant, until recently when it was used more frequently for human rights issues (Zittrain, 2001). However, the case was dismissed by US District Court (Peterson, 2009). In 2006, the Second Circuit Court of Appeals in New York upheld the dismissal of claims in Bano v. UCC. The rationale included, firstly, that the claimant Bi resided illegally on government-owned ground, and therefore she could not sustain claims for trespass or private nuisance, and secondly, it was impractical for a US-court-supervised clean-up project on land owned by a foreign sovereign, i.e. the Government of India (Union Carbide Corporation, 2006).

The following two cases are still ongoing in the US courts. Janki Bai Sahu v. Union Carbide Corporation was filed in US Federal District Court in 2004. It sought compensation for personal injuries claimed to be resulted from exposure to contaminated water and remediation work at the plant after the gas leak. Yet, US Federal District Court dismissed two of the three compensation claims raised in Janki Bai Sahu case in 2005, and also the remaining claim in 2006 (Peterson, 2009). In 2008, the Second Circuit Court of Appeals sent back the Janki Bai Sahu case to the US District Court in Manhattan for limited further activity based strictly on procedural grounds (Union Carbide Corporation, 2010a) and the final decision is yet to be released.

A similar case is the class action suit Jagarnath Sahu et al. v. Union Carbide Corporation and Warren Anderson filed in 2007, seeking compensation for damage to six individual properties allegedly polluted by contaminants from the Bhopal plant, as well as remediation of property in 16 squatter settlements adjoining the plant. Federal Courts issued a suspension of proceedings pending resolution of appeal in Janki Bai Sahu case, as the issues in litigation are so similar (Peterson, 2009).

In summary, plaintiffs from India, including both the Indian government as well as individuals, are not able to claim compensations from UCC under US jurisdiction so far. US courts view itself not the most suitable jurisdiction in handling cases relating to an accident that took place overseas. The final decisions over the two remaining ongoing cases are to be observed.

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3. Legal arguments

1. Multinational Enterprise Liability

Multinational enterprise liability in essence, is the approach adopted by the Indian government to place sole responsibility on affiliated corporations if anything goes wrong for whatever reasons at any affiliate. (Browning, 1993) In addition, the size and the prosperity of the responsible company exert influence on the amount of damages due. (Browning, 1993) This novel legal theory was invented to fight off the resistance to send the case to India when the Indian government desired to bring the lawsuit to the US, in spite of the occurrence of the disaster in India and the country’s sophisticated court system. (Browning, 1993)

Under this approach, the Indian government argued that, since Union Carbide (UCC) controlled the operations of Union Carbide India Ltd. (UCIL), the former should be responsible for any liabilities of the latter. (Mokhiber, 1985) The rationale behind this was that, multinational corporations possess the power to make decisions and take actions that can lead to industrial disasters, especially when the activities in which the corporations engage are ultrahazardous or inherently dangerous. (Mokhiber, 1985) The multinationals are the ultimate creators of any harm done, and therefore, they must assume the responsibility, for it has the resources to discover and take precautions against hazards and to provide warnings of such hazards. (Mokhiber, 1985) UCC was guilty because it failed to handle the ultrahazardous activities safely, caused the disaster, and was unable to warn the people. (Mokhiber, 1985)

2. Extradition of Warren Anderson

The Indian government saw the parent company UCC as guilty, and therefore, it tried to extradite the Chairman, Warren Anderson under the Indo-American Extradition Treaty. Back in 1984, Anderson was arrested when arriving in Bhopal, offering assistance and relief right after the accident. Though he was released, the Indian government summoned him along with 8 other executives and two company affiliates, charging them with homicide in 1987. UCC refused to cooperate and claimed that it was not under Indian jurisdiction. (Kalelkar, 1988) In 1991, the government charged Anderson with manslaughter which could lead to 10 years of imprisonment if he was convicted. In 1992, orders were passed for an extradition from the US as he failed to appear at the hearings where he was the chief defendant in a culpable homicide case.

Even though there exists an agreement between the two countries, namely the Indo-American Extradition Treaty, it was proven to be difficult for it to be enforced in this case and therefore, the Indian government gave up. In 2001, the Attorney-General of India Soli Sorabjee voiced his opinions about the extradition, saying that it was unviable. (Sorabjee, 2001) He pointed out that in 1998, the equivalence between the offence of causing death by rash or negligent act (Section 304-A of the Indian Penal Code) and the offence of manslaughter under the US law was established and would preliminarily be covered under Article 3 of the Extradition Treaty. (Sorabjee, 2001) However, to make the extradition possible, the available evidence had to meet the evidentiary standard of ‘probably cause’ as required under the US law. (Sorabjee, 2001) That is to say, evidence suggesting that Anderson was responsible for the occurrence of the incident had to be found. The 4 missing evidentiary links made it groundless to extradite him, and they included: 1. The actual cause of the leak; 2. Anderson’ knowledge of the cause of the leak before it took place; 3. How much decision-making power over UCIL’s safety standard and design he possessed, and 4. Whether he refused to correct the hazard. (Sorabjee, 2001) Soli Sorabjee concluded that, it would not be worthwhile to complete the ‘missing evidentiary links’ when considering the time and resources needed. Plus, he agreed with the opinions of the US Attorneys that, the State Department would unlikely surrender Anderson to the Indian government. (Sorabjee, 2001) The reasons were primarily humanitarian concerns, namely Anderson’s age of 81, his health, and the 17 years that had elapsed between the incident and the Indian government’s formal request for the extradition. (Sorabjee, 2001)

4. Settlement of the disaster

Even though UCC agreed to provide remedies of USD 470 million in 1989, and 8 Indian employees of UCIL have been sentenced to jail, the victims were not sufficiently compensated. The beginning of the long legal processes was remarked by the Indian government’s passing the Bhopal Gas Leak Act and becoming the leagl representative for victims of the disaster in March 1985. (Kalelkar, 1988) The government then filed a civil suit against UCC in the US and acted as the plaintiff, trying to prove the company to be liable. (Kalelkar, 1988) It employed an American law firm in hope of attaining a higher award or settlement than could be expected in India. (Browning, 1993) In the end, the US courts decided that India was the proper location for any Bhopal action and sent the case there. (Browning, 1993)

Consequently, the Indian government filed suit in India for USD 3 billion. (Browning, 1993) In 1989, UCC agreed to pay USD 470 million for damages caused in the accident in an out-of-court settlement. (Browning, 1993) Criminal charges were nullified, and the Court described the settlement as “just, equitable, and agreeable.” (Browning, 1993) It was the largest settlement ever made in an Indian civil suit. (Browning, 1993) In 1991, the Court ordered the government to use the settlement fund to purchase a group medical insurance policy covering 100,000 persons and to cover any shortfall in the settlement fund. (Kalelkar, 1988) It also requested UCC and UCIL to fund a hospital in Bhopal whose estimated cost was USD 17 million specializing in treating victims of the disaster. (Kalelkar, 1988)

Although the Indian government has distributed a small amount of its own funds, only little of the settlement money started to be given to the victims slowly in 1993. (Browning, 1993) Dow Chemicals who bought UCC in 1999, claims that the USD 470m resolved all existing and future claims against the company. (BBC News, 2010)

When dealing with the employees of the company and the subsidiary, the outcomes were said to be not fair enough. Since 1987, judges in India had heard the case and 12 people were accused of ‘culpable homicide not amounting to murder’ which would mean 10 years in prison for the accused if convicted. (BBC News, 2010) In 1996, the Indian Supreme Court reduced the charges to ‘death by negligence’ with a maximum sentence of up to 2 years in prison. This charge was much less serious than the previous one. (BBC News, 2010) Finally in 2010, 8 Indians were sentenced to 2 years’ imprisonment, but campaigners said it was ‘too little and too late,’ and Warren Anderson was not even mentioned in the verdict. (BBC News, 2010) The result of the trial is described as symbolic rather than just by rights groups and NGOs, and it also indicates how slow-moving India’s criminal justice system and investigative agencies are. (BBC News, 2010)

While UCC and the responsible employees have paid a price which is said to be below the fair price, the survivors who are mostly from the working class have got minimal compensation. (Reuters, 2004) Only about USD 2233 had been given for the dead and even less for survivors. (Reuters, 2004) By the end of October 2003, compensation had been awarded to 554,895 people for being injured and 15310 survivors of those killed. (Kalelkar, 1988) People in the area feel betrayed by UCC as well as the Indian government, (BBC News, 2010) and some said it was due to legal and bureaucratic tangles when only part of the USD 470m was distributed. (Reuters, 2004) In July, 2004, the Indian Supreme Court ordered the government to release any remaining settlement funds to victims. (Kalelkar, 1988)

Some campaigners believe that the site of UCIL continues to poison people, as tones of toxic waste have leaked into the ground. (Reuters, 2004) Doctors also say that many survivors and even their offspring still suffer from psychiatric disorders while numerous women have gynecological problems. (Reuters, 2004) Activists claim that many mothers have provided poisoned breast milk to their babies. (Reuters, 2004) As a consequence, it is not hard to understand why some victims have filed suits in the US, when the Indian government has been on their behalf, suing UCC in Indian courts and yet, not effectively alleviating their plight. In 1993, however, the US Supreme Court made a decision that victims could not seek damages in a US court. (Kalelkar, 1988) In August, 2006, the Second Circuit Court of Appeals in New York City dismissed remaining claims in the case of Bano v. UCC, thus blocking plaintiffs’ claims for property damages and remediation. (Kalelkar, 1988) In September 2006, the Welfare Commission for Bhopal Gas Victims announced that all original compensation claims and revised petitions had been cleared, meaning that no case was pending anymore. (Kalelkar, 1988) Even so, there still have been some suits pending in the US (Kalelkar, 1988). But basing on the past experiences, it is unlikely for the victims to win.

Interestingly, UCC has pointed out that the effects on the victims may have been exaggerated, and the Indian government has not been completely honest about the severity of the consequences of the gas leak. Although the Indian authority said that as many as 500000 people claimed for damages, documents showed that about 75% of these claimants were from areas that were not recognized as gas-affected by the government. And half of the 500000 refused repeatedly to show up for physical examinations. (Browning, 1993) Many believe that a lot of victims had been blinded when they saw reportages with people with bandaged eyes on TV, but UCC claimed that the escaping methyl isocyanate did not cause blindness and relative few suffered any permanent eye damage. (Browning, 1993) Indeed, UCC’s claims may be valid to some extent, as studies by India’s Council of Medical Research report suggested that serious injury to the lung is rather rare, and there is no serious residual eye disease. (Browning, 1993) Also, no evidence showed that the gas caused cancer, birth defects, or other delayed effects. (Browning, 1993)

In short, the Indian government sought to claim damages in the US courts, and successfully gained compensations in India and put 8 Indians into jail. When it failed to use the settlement fund to help the victims, the latter filed suits in the US, trying to get what they deserved. Unfortunately, their efforts have ended up in vain.

4. Implications of the disaster

A. For international companies

It is crucial that the companies bear in mind the potential risk of doing business in developing countries. Ethical and legal issues are central to the discussions in this lesson we learnt from the Bhopal disaster. On one hand, the legal structure including legislation and enforcement are not mature in many developing countries. Governments of developing countries incline to be ‘flexible’ with laws, fail to safeguard the governance of legislature, executive and judiciary. Also, companies have to be sensitive and avoid being exposed to the high political risk of corruption. Regarding the ethical issues, if crisis happens, foreign companies normally ‘appear’ as exploiting the developing countries. There is a general impression that multinational enterprise as a whole should bear financial responsibility for all of its activities.

In the modern context, people often refer corporate ethics to ‘corporate responsibility’. There are four different types of responsibilities that corporations have, namely: corporate, moral, social, and legal. In here, it is subject to the moral, social and legal aspects which are often overlapped and very much related. Moral responsibilities stem from the moral norms. For example corporations must treat the employees fairly, provide a secured working conditions etc. Such moral obligations always remain, no matter whether they are enacted into law. Extending from the stakeholders’ to the public and society, for instance, the protection of the safety of the public is recognized as fulfilling social responsibility. As a result of the incident, many people in the U.S. have been concerning what laws to pass in order to tighten the control and regulations of hazardous industries. Although such laws demand forms legal responsibilities, they are need not necessarily be adopted by foreign companies operating in other countries. Yet, it is predicted that there will be an increasing demand across national borders. (De George, 1985)  

In addition, as mentioned earlier about the ‘multinational enterprise liability’ that the Indian Government has adopted to defend UCIL and sidestep many of the arguments. This ‘principle’ holds that ‘a multinational corporation controlling a majority interest in a hazardous enterprise has a non-delegatable duty to assure that the activity does not cause harm.’ (Walker, 1987) Although this is not justified by the American courts, the fact that the Indian courts took into account of this may have significant implications for occupational and environmental health policies worldwide, which the companies have to be aware of that they may need to increase their environmental and safety standards.

The precautions taken by the companies are important to minimize the risks of the legal, ethical concerns.

When considering insurance which is essential, the companies have to be very careful because in majority of the commercial general liability policies and the section of ‘who is the insured’, there is specific exclusion related to joint ventures and partnerships. The concerns are also that the insurance requirements of the partnered companies individually may not reflect insurance requirement needs of JV agreement. It is not true that a company can take care of the JV operations on its existing liability policies, since only one party's interest will be covered and the other JV partners' interest would not. Hence, companies also need to be aware of seeking acceptance by the owner of the JV partners’ practice insurance policies. (Collinsworth, 2001)

During the construction and entering into a contract, it is very important to clarify the share of risk and losses in expressive terms including share of indemnification if some accidents happen. There should be a clear allocation of responsibility e.g. 50-50. Companies may also specify and indicate exemption clause subject to man-made errors or intentional sabotage. Furthermore, clarifying Joint liability and joint negligence are needed.

-Joint Liability: Liability that is owed to a third party by two or more other parties together. One wherein joint obligor has right to insist that co-obligor be joined as a codefendant with him, that is, that they be sued jointly.

-Joint Negligence: In case of “joint negligence” of several people, proximately causing accident, they act together in concert and either do something together which they should not do or fail to do something which they are together obligated to do under circumstances. (Hatem, 2003)

B. For the Indian Government

As it is the state—India, which grants corporations the rights to set up JV or FDI, if it fails to enforce its laws and make them accountable, it belongs to the state’s moral responsibility. The government has lost its reputation and credibility since it has failed to ensure justice, the safety and constitutional rights of its people. (Mathur, 2010) Therefore it is a must to develop the law system with effective legislature, active executive and assertive judiciary.

The compensation made by UC (U.S.) was being awarded arbitrarily. The mechanism was set up for repayment but there was not a regulatory body to monitor usage of the reimbursement.  This potentially led to corruption because of lack of control.

Besides, the Indian government did not react promptly nor propose measures. It has failed to give sufficient warnings to the potentially affected population after the accident happened which would have possibly avoided such vast number of causalities. Therefore, a prompt resolution system should be implemented for any accident in the future.

Last but not least, India should step up the jurisdiction of domestic court in regulating detrimental environmental repercussions of these multinational companies. However, it has to be mindful that the standards should not be high enough to discourage foreign investment.

The reforms of legal structure, improvement of government’s credibility and clearing corruption need to be done in order to not to discourage foreign investment and to contribute to economic and social development. Most importantly, it can better protect the rights of the Indian citizens.

5. For developing countries

The Bhopal incident alerted the developing countries to re-examine their policies towards toxic substances and hazardous industries regulations in terms of, safety precautions, compensation laws, reporting systems, crisis management procedures and facilities, the industrial site, technology acquisition regulations, inspection and regulatory processes etc. It is suggested to cooperate with the trade unions and the government. (Tyagi, 1988) Also the developing countries should responsible for legislating and enforcing strict environmental and safety standards to protect their people to prevent any accidents.

International standards available can give reference to the developing countries to make a more sound judgment. The Bhopal disaster has shown that enforceable international standards are necessary for hazardous industries, especially in developing countries. These standards can narrow the standard-gap of the developed countries. The international standards can provide norms for assessing the performance of the companies which involve hazardous activities even without enforcement.

For example, The U.N. Draft Code of Conduction on Transnational Corporations intends to provide either mandatory requirements or voluntary guidelines for TNCs to follow. Both legally binding Code and a voluntary Code are applicable. If binding, it would have served as a Convention with both national and international mechanisms for implementation. If voluntary, it would have merely served as a set of guidelines for the participating parties. Furthermore, it facilitates the cooperation among states on issues relating to TNCs. Mainly addressing national sovereignty, respect for social and cultural objectives and policies, human rights, non-discrimination, corruption, consumer protection, and environmental issues, while it in the meantime, also attempts to solve the cross-cultural issues which resulting diversity of laws and practices. (http://www1.umn.edu/humanrts/ataglance/compdftun.html)

6. For U.S. government

Professor Joel Paul states this in Harvard International Law Journal: ‘By allowing transnational business to choose legal systems imposing a lower regulatory burden than the United States, US courts have effectively lowered regulatory standards. By refusing to exercise jurisdiction in the Union Carbide’s case, it allows a US manufacturer to avoid US tort liability and encourages other manufacturers to locate plants abroad.’(Paul, 1991)  This does not only reveal the fact that the US standards do not keep up with the expected international standards. This allows the U.S. to shuffle the responsibilities around and avoid them herself. It is important to urge the U.S. to sign the international convention and ratify it so to incorporate into the domestic law. The incentive for the U.S. government to do that is to avoid the destruction of reputation of the U.S. international companies if something bad happens. It definitely has to look into the cost and benefit analysis to strike a balance between the acceptable level of standard and prevent soar of costs. The aim is to balance the public interests and the private profits.  

As for prevention, the US Government should toughen the regulations of these MNCs operations overseas and also through education by indoctrinating the importance of shouldering environmental responsibility as the norms of these MNCs by encouragements and rewards. Only by a ‘carrot and stick’ approach can you avoid something similar to the Bhopal Disaster to happen again. Although Indian judgments cannot be enforced in the US, it is clear that US court should step up a higher standard in convicting MNCs for gross negligence that leads to serious harm to the environment.

Conclusion

The conflict between public interest (environmental and labor interest of developing countries) and private profits (shareholder interest of MNCs) is complicated by means in which remedy can be sought should tragedy like Bhopal take place. The conflict of laws between different countries is especially the essential focus. The US choice-of-law principle often prevents applicants from other countries, such as India in seeking compensation from the tortuous acts committed by MNCs in developing countries, citing reasons that either they do not have the jurisdiction as it is largely a domestic issue in developing countries or these applicants (usually poor residents and labor employed by MNCs) have no arguable case at all. In many occasions, these plaintiffs, such as the victims of Bhopal case, have no financial means and resources to get the share of justice from the judicial system of US. Forced to litigate in their home country, judgments of India are also unenforceable in US. To improve the situation for preventive purpose, US Government should step-up its regulation to ensure that MNCs adhere to international standard. Most importantly, developing countries like India need to gradually transform their legal system so that MNCs would be truly held accountable if accidents take place.

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