Union Carbide Corporation
V.
Union of India (AIR 1990 SC 273)
Landmark Case on Industrial Disaster Liability.
Author- Darshita Dubey, B.A.LLB(Hons),S.S. Khanna Girls Degree College, University of Allahabad, Prayagraj
ABSTRACT
The case of Union Carbide vs Union of
India is related to the Bhopal Gas Tragedy, which happened on the night of
December 2–3, 1984. A harmful gas called methyl isocyanate leaked from a
pesticide factory in Bhopal, Madhya Pradesh. The factory was run by Union
Carbide India Limited. This company was partly owned by Union Carbide Corporation,
an American company.
The gas leak killed thousands of
people and left many more seriously injured. It became one of the worst
industrial disasters in the world.
In 1985, following the disaster, the
Indian government passed a law that gave it the authority to speak and act on
behalf of all the victims in court.
The Indian government initially took
the case to a court in the United States, seeking 3.3 billion dollars in
compensation. However, the case was later shifted to Indian courts. In 1989,
the Supreme Court of India approved a settlement where Union Carbide
Corporation agreed to pay 470 million dollars as a complete and final
compensation amount.
This also meant that all civil and criminal
cases against the company would be dropped.
This decision was criticised by many
people because they believed the amount was too low compared to the damage
caused. In 1991, the Supreme Court reviewed its earlier order. It kept the
compensation amount the same but said that criminal cases against Union Carbide
and its officials could not be dropped just because they paid money. The court
said criminal responsibility must be faced separately.
1. PRIMARY DETAILS OF THE CASE
|
Case No |
: |
WRIT PETITION (CIVIL) NO. 26 OF 1989 |
|
Jurisdiction |
: |
Supreme Court Of India |
|
Case Filed on |
: |
5th March 1985 |
|
Case Decided on |
: |
4th October 1991 |
|
Judges |
: |
Chief Justice Ranganath Mishra, Justice M.N. Venkatachaliah, N.D.
Ojha B.C. Ray and Justice M.H. Kania |
|
Legal Provisions involved |
: |
Fundamental Rights Under Articles 14, 19 & 21. |
|
Case Summary Prepared by |
: |
Darshita Dubey |
2. BRIEF FACTS OF THE CASE
The case of Union Carbide Corporation
vs. Union of India stemmed from the devastating Bhopal Gas Tragedy, which took
place during the night of December 2–3, 1984. A toxic gas called methyl
isocyanate (MIC) escaped from the pesticide factory of Union Carbide India
Limited (UCIL) in Bhopal, Madhya Pradesh. This factory was owned by Union
Carbide Corporation (UCC), a multinational company based in the United States.
The gas leak led to the immediate deaths of thousands and left over half a
million people suffering from serious health problems, making it one of the
most severe industrial disasters in history.
In response to the disaster, the
Government of India enacted the Bhopal Gas Leak Disaster (Processing of Claims)
Act, 1985, giving itself the exclusive right to represent all victims. The
government initially filed a claim for $3.3 billion in a U.S. court, but the
case was transferred to Indian courts. In 1989, the Supreme Court of India
approved a settlement in which UCC agreed to pay $470 million (around ₹750 crore) as full and final
compensation for all claims, including civil and criminal liability. However,
this decision was widely criticized for being inadequate and unjust to the
victims.
In 1991, upon review petitions, the
Supreme Court upheld the settlement amount but reinstated the criminal
proceedings that had earlier been quashed. The Court ruled that criminal
liability could not be extinguished through a financial settlement and that
prosecutions against UCC officials must continue.
This case is significant as it raised
critical issues about corporate responsibility, jurisdiction over multinational
companies, the adequacy of compensation in mass torts, and the role of the State
in protecting the rights of its citizens. It remains a landmark judgment in
Indian legal and environmental history.
3. ISSUES INVOLVED IN THE CASE
The main primary issues involved in
the case are:
1.
Union Carbide Corporation’s liability as the parent company for
the Bhopal Gas Tragedy caused by its Indian subsidiary.
2.
Application
of the principle of absolute liability to a multinational corporation operating
a hazardous industry in India.
3.
Adequacy,
fairness, and legality of the $470 million compensation settlement approved by
the Supreme Court.
4.
Jurisdiction
of Indian courts to adjudicate claims and enforce legal responsibility against
a foreign corporation.
5.
Continuation
or extinguishment of criminal proceedings against UCC and its officials despite
the civil settlement.
4. ARGUMENTS OF THE PARTIES
Plaintiff
Union of India argued that Union
Carbide Corporation (UCC), as the parent company of Union Carbide India Limited
(UCIL), was absolutely liable for the Bhopal Gas Tragedy.
It claimed the tragedy was the result
of UCC’s negligence in design, operation, and
safety standards of the Bhopal plant.
The government stated that UCC used
outdated and unsafe technology in India, which would not have been allowed in
the United States.
It asserted that hazardous industries
must be held to the standard of absolute liability, regardless of intent or
negligence.
Union of India sought $3.3 billion in
compensation, arguing the scale of death, injury, and environmental damage
warranted a high amount.
It emphasized that Indian courts had
jurisdiction, especially after U.S. courts declined to hear the case.
The government insisted that the civil
settlement could not nullify the criminal liability of UCC and its executives.
It claimed authority to represent all
victims under the Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985.
Defendant
Union Carbide Corporation (UCC) argued
that it was not directly liable for the Bhopal Gas Tragedy, as the plant was
operated and managed by its Indian subsidiary, Union Carbide India Limited
(UCIL).
It claimed that UCIL was a separate
legal entity with independent management and majority Indian ownership.
UCC maintained that the gas leak was
caused by sabotage by a disgruntled employee, not by any design flaw or
negligence on its part.
It asserted that it had provided
proper safety standards and training, and that the operational responsibility
rested with UCIL.
UCC argued that the $470 million
settlement made in 1989 was full and final, covering all civil claims and liabilities.
It contended that criminal proceedings
should not continue after a lawful and mutually agreed settlement.
UCC also raised concerns about unfair
treatment, lack of jurisdiction, and procedural issues in the Indian legal
process.
5. LEGAL ASPECTS INVOLVED
The following
provisions of the Fundamental Rights are as under:
●
Article 14 : Ensures equality before the law and
equal protection of the laws. A corporation can invoke this right if it faces
discrimination by the State or if a law treats it arbitrarily in comparison to
others in similar circumstances.
●
Article 19 : Guarantees certain freedoms to
citizens, but some of its clauses—such as Article 19(1)(g), the right to
practice any profession or carry on any occupation, trade or business—have been
interpreted by courts to extend to companies and partnerships as well.
●
Article 21: Provides for the right to life and
personal liberty. While this is generally applicable to individuals,
corporations may indirectly rely on the principles of fairness, reasonableness,
and due process under this article in administrative or regulatory actions that
affect their functioning.
6. JUDGMENT
In 1989, the Supreme Court approved a
settlement of $470 million between Union Carbide Corporation and the Union of
India, quashing all civil and criminal proceedings. However, in 1991, after
review petitions, the Court upheld the compensation but reinstated the criminal
cases, holding that criminal liability could not be waived through a civil
settlement.
7. Impact and Significance:
The Union Carbide Corporation vs Union
of India case emerged from the 1984 Bhopal gas tragedy, which caused thousands
of deaths and long-term health issues due to the leakage of toxic gas from
Union Carbide’s pesticide plant.
The case had a major impact on Indian
legal, environmental, and human rights systems. In 1989, the Supreme Court
approved a $470 million compensation settlement, which drew criticism for being
inadequate and for dropping criminal charges.
This case introduced the important
legal principle of absolute liability, making companies strictly responsible
for harm caused by hazardous industries, regardless of fault.
It marked a turning point in Indian
environmental law by ensuring stronger regulations and corporate
accountability.
The case also exposed serious
shortcomings in disaster management, victim rehabilitation, and environmental
cleanup.
Despite the settlement, justice for
many victims remained incomplete. The case continues to be a significant
reference point in discussions on industrial safety, corporate negligence, and
environmental justice in India..
Conclusion
The conclusion of the Union Carbide
Corporation vs Union of India case was that the Supreme Court approved a
settlement in which Union Carbide agreed to pay 470 million US dollars as
compensation for the victims of the Bhopal gas tragedy.
In return, all civil and criminal
cases against the company were closed at that time. However, the settlement was
widely criticized because many people felt the compensation was too low for the
scale of the disaster, which caused thousands of deaths and long-term health
problems.
Later, the Supreme Court admitted that
dropping criminal charges was a mistake and restored them. Even though some
money was paid, many victims felt they did not get full justice.
The case showed that India needed stronger laws to hold companies responsible for industrial accidents and to protect the rights of affected people. It remains an important example of corporate negligence and its consequences
- Union Carbide vs Union of India case summary
- Bhopal Gas Tragedy case 1990
- Landmark environmental case India
- Industrial disaster liability case
- Supreme Court Bhopal gas judgment
- UCC liability in Bhopal gas leak
- Absolute liability principle India
- 1990 AIR 273 case brief
- Corporate negligence in India
- Environmental justice in India
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