Union Carbide Corporation

Union Carbide's Response Efforts to the Tragedy and the Settlement

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Response Efforts

In the wake of the release, Union Carbide Corporation (UCC) provided immediate aid to the victims and attempted to set up a process to resolve their claims. In the days and months after the disaster, UCC took the following actions:

• Immediately provided approximately $2 million in aid to the Prime Minister’s Relief Fund;
• Immediately and continuously provided medical equipment and supplies;
• Sent an international team of medical experts to Bhopal to provide expertise and assistance;
• Openly shared all its information on methylisocyanate (MIC) with the Government of India (GOI), including all published and unpublished toxicity studies available at the time;
• Dispatched a team of technical MIC experts to Bhopal on the day after the tragedy, which carried MIC studies that were widely shared with medical and scientific personnel in Bhopal;
• Funded the attendance by Indian medical experts at special meetings on research and treatment for victims;
• Provided a $2.2 million grant to Arizona State University to establish a vocational-technical center in Bhopal, which was constructed and opened, but was later closed and leveled by the government;
• Offered an initial $10 million to build a hospital in Bhopal; the offer was declined;
• Provided an additional $5 million to the Indian Red Cross;
• Established an independent charitable trust for a Bhopal hospital and provided initial funding of approximately $20 million, and
• Upon the sale of its interest in Union Carbide India Limited (UCIL), and pursuant to a court order, provided approximately $90 million to the charitable trust for the hospital.

The Settlement

During the 1980's, as Union Carbide continued to provide interim relief funds and work with the Bhopal community on medical and economic aid, legal actions proceeded in both the U.S. and India. The courts ultimately decided that India was the proper country for legal proceedings. Matters were consolidated there. The Indian Parliament passed a law, the Bhopal Gas Leak Disaster Act (1985), enabling the GOI to bring all claims on behalf of its citizens. The Supreme Court of India subsequently affirmed the validity of this law.

In 1989, the government’s claims against Union Carbide and UCIL came before the Supreme Court of India. In February 1989, after 24 days of hearings, the Supreme Court of India directed a final settlement of all Bhopal litigation in the amount of $470 million. The GOI, UCC and UCIL accepted the Court’s direction and, 10 days after the decision, UCC paid $425 million and UCIL paid $45 million to the GOI. Other terms of the settlement agreement included a provision that the GOI would defend the settlement if it were challenged, and a continued denial of liability by Union Carbide and UCIL. The Court entered Orders dated Feb. 14 and Feb. 15, 1989, describing the settlement as “just, equitable and reasonable.”

Supreme Court of India Upholds Settlement

Challenges to the settlement were mounted in 1990 and again in 2006, but each time the Supreme Court of India upheld the settlement.

In a May 15, 1989 order, the Supreme Court of India agreed to hold the prior settlement orders in abeyance to allow challenges to the settlement’s validity and adequacy. Challenges were heard by Constitution Benches over a two-year period in 1990 and 1991. In a 69-page decision, the Supreme Court upheld the adequacy and reasonableness of the settlement. In its 1991 decision, the Supreme Court of India also:

• Required the GOI to purchase, out of the settlement fund, a group medical insurance policy to cover 100,000 persons who may later develop symptoms; and
• Required the GOI to make up any shortfall, however unlikely, in the settlement fund.

The government devised a claims adjudication system and began paying claims in about 1995. By 2002, nearly all claimants had been paid. Because of interest accruals and exchange rates, the original settlement had grown considerably, and about $330 Million (Rs. 1360 crores) remained unspent. In 2004, the Supreme Court ordered the GOI to disburse those remaining funds pro rata among the same individuals already compensated.

In 2006, another challenge was mounted to the settlement’s adequacy. Non-government organizations sought to have the GOI increase the settlement amount by five times. The government defended the adequacy of the settlement, stating in an affidavit dated October 26, 2006, that “the validity of the settlement by no stretch of interpretation can be questioned at this stage as each and every claimant has got compensation as per law and his entitlement,” that “by no logic and reason is it open to say even for a moment that the justness or determination [of compensation] is impaired,” and that “[t]he application filed by the applicants is frivolous and may be dismissed with heavy costs.” Additionally, in November 2010, the affidavit of the Office of Welfare Commissioner – the government office charged with administering the settlement – reaffirmed, using the same language the Government used in 2006, that all those legitimately affected had been paid, including people who were merely present in the area and not injured. In a 2007 order, the Supreme Court once again determined that the settlement was adequate.

Click here to review the complete 1991 and 2007 Indian Supreme Court decisions upholding of the 1989 settlement.

• 1991 Part 1
• 1991 Part 2
• 2007

Frequently Asked Questions Re: Union Carbide's Response Efforts to the Tragedy

1. How do you respond to assertions that Union Carbide would not share all its toxicological information on methylisocyanate (MIC) after the tragedy due to propriety concerns?
A. This is a widespread misconception and is just not true. UCC immediately gave all toxicity information on the chemicals involved in the manufacture of MIC to the GOI following the incident. Additionally, the GOI seized plant records after the tragedy and these also would have included all such information on MIC. On the day of the tragedy, UCC dispatched a team of technical MIC experts, who carried MIC studies that were shared with medical and scientific personnel in Bhopal. UCC experts provided all published and unpublished studies available at that time on MIC toxicity.

2. What role has the Government of India played in the aftermath of the Bhopal tragedy?
A. The GOI enacted the Bhopal Gas Leak Disaster Act in March 1985, enabling the GOI to act as the sole legal representative of the victims in claims arising from or related to the Bhopal disaster. In 1989, the GOI entered into a $470-million settlement with UCC and UCIL on behalf of the victims. The settlement resulted in a fund that determined eligibility and paid the victims; a government organization administered the fund. Pursuant to the settlement, therefore, the GOI assumed responsibility for disbursing funds and providing medical coverage to citizens of Bhopal in the event of future illnesses.

3. Has the Government of India paid out the settlement money to the victims?
A. Virtually all claims had been reviewed and adjudicated by 2002. A total of Rs. 1511.51 crores was paid from the settlement fund, according to a GOI Scheme (program), which established the categories of claims and amounts of compensation, and which was administered by the Bhopal Gas Victims Welfare Commissioner. UCC played no role in the distribution of settlement funds.

Various activist groups petitioned the Supreme Court in 2003, seeking disposal of the remaining balance of the settlement funds, which was approximately equal to the amount already paid. In July 2004 -- 15 years after reaching settlement -- the Supreme Court directed the Welfare Commissioner to disburse the balance of Rs. 1503.01 crores to the claimants who had already received compensation, thus doubling the amount of compensation per claimant.

Subsequently, the Welfare Commissioner reported (see paragraph 22) that all claims had been adjudicated and that the claimants had been paid all amounts due to them under the Scheme and the directions of the Supreme Court.

In its 1991 reaffirmation of the 1989 Bhopal settlement, the Indian Supreme Court required the GOI to make up for any shortfall in the settlement amount (See page 682, paragraph 198 of the Court’s ruling) and to acquire a medical insurance policy to cover 100,000 people who might later develop symptoms shown to have resulted from being exposed during the gas release. (See pages 684-686, paragraphs 205-208 of the Court's ruling.)

4. Media reports indicate that the victims are still suffering. What is Union Carbide doing about this?
A. UCC has contributed significantly in providing aid to the victims. UCC and UCIL paid the full settlement of $470 million to the Government of India in 1989, and also provided substantial monetary and medical aid to the victims, including establishing a charitable trust fund to which it paid approximately $100 million (including the proceeds of its sale of all its UCIL stock) to build a hospital that opened in Bhopal in 2000.

Pursuant to the settlement, the GOI assumed responsibility for disbursing funds from the $470-million settlement and providing medical coverage to citizens of Bhopal in the event of future illnesses. In July 2004, 15 years after reaching settlement, the Supreme Court of India ordered the GOI to release all additional settlement funds to the victims. Subsequently, the Welfare Commissioner reported (see paragraph 22) that all claims had been adjudicated and that the claimants had been paid all amounts due to them under the Scheme and the directions of the Supreme Court.

It is important to remember that when the Supreme Court of India affirmed the settlement in 1991, the Court also:

• Required the GOI to purchase, out of the settlement fund, a group medical insurance policy to cover 100,000 persons who may later develop symptoms; and
• Required the GOI to make up any shortfall, however unlikely, in the settlement fund.

Furthermore, in 2007, the Supreme Court of India again reaffirmed the adequacy and finality of the 1989 settlement.

It should also be noted that UCC has never been found liable or responsible for damages by any court. As the India Supreme Court noted in its 1991 decision, in analyzing whether “the settlement is just, fair and adequate,” it is “necessary to remind ourselves” that “we should not proceed on the premise that the liability of UCC has been firmly established” because “the suit involves complex questions as to the basis of UCC’s liability and assessment of the quantum of compensation in a mass tort action.”

5. What is UCC's response to suggestions that it make a "humanitarian gesture" to provide further assistance to the victims and their families?
A. Calls for a "humanitarian gesture" from UCC are misguided. UCC has made humanitarian gestures by settling the case and setting up a hospital although it had no legal obligation to do so. Given that the GOI currently is trying to re-write the Rule of Law by initiating a Curative Petition to either unilaterally amend or even overturn the 34-year-old settlement, it is clear that any additional humanitarian gesture made now regarding compensation runs a substantial risk of being deemed an admission of responsibility, criticized as inadequate and could provoke calls for additional humanitarian aid that will never be perceived as sufficient.

Such a gesture cannot be justified, especially since UCC bears no legal responsibility regarding the tragedy. As the U.S. Court of Appeals for the Second Circuit in New York noted in ruling that UCC was not responsible for the effects of pollution on the plant site: “[M]any others living near the Bhopal [India] plant may well have suffered terrible and lasting injuries from a wholly preventable disaster for which someone is responsible. After nine years of contentious litigation and discovery, however, all that the evidence in this case demonstrates is that UCC is not that entity.”

Click here for the complete 2013 opinion of the U.S. Court of Appeals for the Second Circuit in New York that UCC Not Liable for Pollution-Related, Personal Injury Claims.

6. Is it true that the GOI at one time demanded $3 billion in damages from UCC for the gas release?
A. In the negotiations leading to the 1989 settlement, the GOI never demanded $3 billion in damages from Union Carbide. A $3 billion figure was mentioned in the GOI’s amended pleading in India, but was not based on any actual number of deaths or injuries arising out of the disaster. Instead, it had its genesis in UCC’s announcement of a corporate recapitalization in November 1986, including a plan to repurchase $3.1 billion of debt. When this announcement was made, the GOI sought to block the recapitalization unless UCC put up a like sum as collateral for plaintiffs’ claims.

The $3 billion figure was never the basis of negotiations between the parties. In fact, the highest amount ever demanded by representatives of the GOI was $630 million. As recounted in the Supreme Court of India's May 1989 order, in the final stages of negotiations the difference between the parties had been narrowed to a $426 million offer by UCC and a demand for $500 million by the GOI. Taking into account the positions of the parties and the extensive record before it, the Supreme Court suggested the final sum of $470 million.