The Bhopal Gas Tragedy

The Settlement Contd...

Then they shifted blame to a disgruntled worker. In May 1986, Judge J.F. Keenan ruled that India and not the US was the appropriate forum for the Bhopal compensation litigation. In the first pre trial hearing in the consolidated Bhopal litigation in US federal courts, John F Keenan, asked UCC as 'a matter of fundamental human decency' to provide an interim relief payment of $5 - 10 million. UCC agreed to provide $5 million, provided a satisfactory plan of distribution and accounting of the funds was devised. For 8 months, the UCC and the GoI haggled over terms of reference and conditions for using the $5 million interim relief. Finally, in November 1985, the parties agreed to channel the money through the American Red Cross to the Indian Red Cross.

Even after one year of the tragedy, no one—not even the official of the MP Government in charge of relief for the victims—had any idea what the Red Cross would do with the money.

On December 17, 1987, a Bhopal District Court Judge passed an order directing UCC to pay Rs. 3.5 billion as interim relief. UCC challenged this order in the MP high court (at Jabalpur) on the grounds that the trial judge was not authorised to pass the order under any provisions of the Indian Civil Penal Code.

On April 4, Justice S. K. Seth of the High Court upheld the liability of UCC for the Bhopal disaster, but reduced the interim compensation to Rs 2.5 billion.

UCC appealed to the Supreme Court of India against the High Court order saying "No court that we know of in India or elsewhere in the world has previously ordered interim compensation where there is no proof of damages or where liability is strongly contested."⁸ On February 14, 1989, the Supreme Court directed UCC to pay up US $ 470 million in "full and final settlement" of all claims, rights, and liabilities arising out of the disaster. The Supreme Court of India ruled that the $470 million settlement was "just, equitable and reasonable."

The Bhopal Gas Tragedy - Next Page >>>

8] An independent investigation carried out by Arther D. Little, Inc, on behalf of UCC, showed that the Bhopal incident was caused by a disgruntled employee who introduced a large volume of water by connecting a water hose directly to the tank.

Case Details

Case Code : BECG009
Themes: Ethics in Business
Case Length : 09 Pages
Period : 1980-2001
Organization : Union Carbide India Limited
Pub Date : 2002
Teaching Note : Available
Countries : India
Industry : Chemicals

Free Case Studies

Business Strategy
Finance
HRM
Insurance
IT and Systems
Marketing
Operations
Leadership
More Case Studies >>

Micro Case Studies

Business Environment
Business Ethics
Business Strategy
Human Resource Management
IT and Systems
Marketing
Operations
Micro Case Studies >>

Free Resources

Micro Case Studies
Free Case Studies
Articles
Interviews
Book Reviews
Glossary
Online Quiz
More Free Resources >>

Case Related Links

Best Selling Case Studies
Business Case Studies
Learning With Case Studies
Cases Used in Textbooks
Prize Winning Case Studies
More Case Studies >>

Case Studies and Management Resources