Dow and the Bhopal Tragedy

The 1984 gas release from the plant in Bhopal, India was a terrible tragedy. It is important to note that The Dow Chemical Company (TDCC) never owned or operated the Bhopal plant. When Union Carbide Corporation (UCC) became a subsidiary of TDCC in 2001, TDCC did not assume UCC’s liabilities. Despite these facts, there are those who continue to assert that TDCC has liability for the Bhopal tragedy.

Further information on Union Carbide (UCC) and the Bhopal tragedy can be found here www.unioncarbide.com/bhopal.

Relationship between Dow & UCC

What is the relationship between The Dow Chemical Company (TDCC) and Union Carbide (UCC)?
In February 2001, Dow acquired all of the shares of UCC stock, and UCC became a wholly owned subsidiary of Dow. Dow and UCC did not merge and did not become the same company. Since the 2001 transaction, UCC has operated as a wholly-owned subsidiary of Dow, with its own assets and liabilities distinct and separate from Dow’s. Today, despite the merger of Dow and DuPont, UCC remains a separate subsidiary company with its own assets and liabilities.

Did The Dow Chemical Company (TDCC) inherit any liability for Bhopal when it purchased the shares of Union Carbide (UCC) in 2001?
No. While UCC's stock is owned by TDCC, UCC remains a separate company as a TDCC subsidiary. Under well-established principles of corporate law, both in India and the United States, TDCC did not assume UCC's liabilities as part of the 2001 transaction.

Indeed, according to the formal legal opinions of two respected Indian jurists, Senior Counsel, Dr. Abhishek Manu Singhvi and Mr. Arun Jaitely, TDCC cannot be found liable under the laws of India. (See the full opinions in the following documents: > Dr. Abhishek Manu Singhvi and Arun Jaitely).

TDCC did not own UCC’s stock during the time the Bhopal plant was operating or at the time of the December 1984 gas release. By the time TDCC purchased UCC’s stock in 2001, nearly 17 years after the gas release, UCC had sold its interest in Union Carbide India Limited (UCIL), the entity which operated the plant at Bhopal.

Most important, UCC and UCIL settled all liability claims related to the gas release under a legally-binding settlement with the Union of India approved by the Supreme Court of India in 1989, some 12 years before UCC’s transaction with Dow. The Court has reviewed the fairness and adequacy of the agreement and has upheld the validity of the agreement twice since 1989, in 1991 and again in 2007. In the settlement, UCC was not held responsible for the gas release. No court has ever ruled on UCC’s liability for the gas release or found UCC liable.

In June 2013 in a case addressing the corporate liability of UCC for acts of UCIL, the U.S. Court of Appeals for the Second Circuit ruled that UCC is not liable for any environmental remediation or related site environmental consequences at the Bhopal plant site in India. The Court stated: “[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.”

Has Dow accepted liability for other claims that were filed against Union Carbide (UCC), such as asbestos?
No. Although some have made such an assertion, it is categorically false. These assertions are a misguided attempt to establish that there has been a precedent of Dow accepting liability for UCC. Such precedent does not exist, because TDCC has never paid asbestos claims nor accepted or paid liabilities of any kind on behalf of UCC.

Government of India Curative Petition (CP)

In December 2010, the Union of India filed a civil Curative Petition in the India Supreme Court against The Dow Chemical Company (TDCC), Union Carbide Corporation (UCC) and others. A Curative Petition is a seldom-used procedural device in India’s legal system designed for rare and narrowly defined situations to correct judgments entered as a result of a procedural judicial error. The only proper parties to such a petition are those who were parties to the original judgment. The government’s Curative Petition was filed to unilaterally enhance the 1989 settlement agreement negotiated by the Union of India with UCC and Union Carbide India Limited (UCIL) to settle all claims arising from the 1984 Bhopal gas disaster, and the Supreme Court judgment approving that settlement. A hearing on the CP has been announced for April 2019.

TDCC believes that this attempt to negate the settlement agreement between the Union of India and UCC and UCIL threatens the rule of law. Additionally, the Indian Government’s attempt to hold TDCC responsible via the Curative Petition is inappropriate for the reason that TDCC had no involvement in the Bhopal tragedy or the settlement which the Government is unilaterally seeking to amplify.

Statement of The Dow Chemical Company Regarding the 2010 Curative Petition
The Dow Chemical Company has lodged objections to the curative petition in which the Union of India seeks to reopen the 30- year-old legal settlement concerning the 1984 gas release in Bhopal, India. TDCC has long maintained that it has no connection to the incident and does not belong in any legal proceeding involving Bhopal. TDCC does not conduct business in India – a prerequisite to being brought into court in the country – and was not a party to the original judgment which the curative petition seeks to overturn. TDCC cannot now be added to the curative petition proceeding related to that judgment. Moreover, UCC settled the claims related to the gas release in 1989, that settlement was approved, and the money has been paid to claimants who met the Government’s qualifying criteria. It is improper for the Government to reopen a signed and fully implemented agreement unilaterally and seek more money now.
The demand in the curative petition and from some non-governmental organizations to attach liability to Dow, which has no connection to the tragedy or its aftermath, is misguided. TDCC never owned, operated or inherited Union Carbide India Limited's (UCIL) Bhopal site. The fact that TDCC could not have liability for the Bhopal gas tragedy is recognized both under principles of U.S. corporate law, and by the laws of India.

It is important to remember that the Supreme Court has validated the 1989 settlement agreement between the Government of India and Union Carbide Corporation (UCC) and its then-subsidiary, UCIL, three times – in 1989, 1991 and 2007 -- refusing to validate challenges and acknowledging the long-standing position taken by the Government of India that the settlement is fair and reasonable.

Is there legal precedent for the curative petition?
There is no legal precedent for this action. The request in the Curative Petition is completely contrary to law and due process under India’s own legal procedures. The Curative Petition mechanism is a rarely-used provision in Indian law permitting revisiting final judgments only where the judgment was the result of an error or breach of the principles of natural justices due to a mistake by the court and where certain other procedural requirements have been met. Here, the India Supreme Court made no mistake in approving (and reapproving) the 1989 settlement, nor have the other procedural requirements been met.

A Curative Petition in India is designed to "unwind" a legal judgment as a result of procedural error or mistake. Here, such a result would effectively reinstate the litigation, not result in a judgment for money. For that reason, were the Supreme Court of India to permit the Government to turn back the agreement, the proper result would be to return the money with interest to Union Carbide Corporation (UCC) and Union Carbide India Limited and to require the Government to prove UCC’s liability before any money judgment could be ordered.
But such a result under these circumstances would be a violation of due process given the underlying events occurred 35 years ago. In 1991 the Indian Supreme Court stated 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.”

What is the basis for The Dow Chemical Company’s (TDCC) belief that the Curative Petition is improper?
By filing the petition to reopen the settlement of the Bhopal gas disaster, some 30 years after the settlement, the Government is reopening the 1989 agreement it negotiated and signed with Union Carbide Corporation (UCC) and Union Carbide India Limited (UCIL). That agreement was approved by the India Supreme Court in 1989 and has since been twice reviewed and validated (1991 and 2007) in the face of challenges very similar to those now being brought by the Government of India. In rejecting previous attacks on the settlement agreement, the India Supreme Court has described the agreement as fair, just, appropriate – and final.

Not only is it improper to reopen the settlement agreement with regard to UCC, but it is even more inappropriate to try to impose liability for the Bhopal tragedy on TDCC, which did not become a shareholder in UCC until 2001, some 17 years after the event and 12 years after UCC and UCIL had settled the matter with the full approval of the India Supreme Court. The fact is that TDCC had no connection whatsoever to the tragedy or the settlement.

The attempt to rewrite the settlement agreement to obtain additional funds is improper for the additional reasons that UCC has never been found legally liable for damages resulting from the Bhopal gas release; rather, the settlement was a voluntary undertaking to compromise disputed liability. As the India Supreme Court noted at the time it approved the settlement, 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.”
Principles of the rule of law, due process and fundamental fairness should lead the Court to reject the relief sought in the Curative Petition on its merits – just as it did in 1991, and again in 2007, when essentially the same grounds were presented. Indeed, the Government of India itself defended the settlement as fair and appropriate against both of those challenges, and the Welfare Commissioner – the Government of India office charged with administrating the settlement fund –defended the fairness and finality of the settlement agreement as recently as November 2010.

What is the amount requested in the Curative Petition, and does it include the $470 million that was already paid by Union Carbide (UCC) and Union Carbide India Limited (UCIL) to settle the claims?
We understand that the Government of India is asking for a judicially imposed enhancement of the 1989 settlement agreement in amounts ranging from $1.2 billion to $1.6 billion, plus additional funds related to alleged plant site pollution. We further understand that the amounts sought do not contemplate return of the $470 million previously paid by UCC and UCIL to settle the claims rather than litigate them in the courts of India and, instead, are in addition to that amount. None of these requests are appropriate or supported by any principle of law.

What portions of the amount sought is being sought from The Dow Chemical Company (TDCC), from Union Carbide (UCC) and from other parties?
The Curative Petition appears to be directed to all the named parties – UCC, TDCC, Eveready Industries India Limited and its parent company, MacLeod Russel India Limited -- without an allocation among them.

Why did the Government of India reverse its long-standing position that the 1989 settlement was fair and final?
The Government’s sudden reversal of their long-standing position is inexplicable for a number of reasons. In 1991, when the India Supreme Court rejected attempts to reopen the 1989 settlement, the proponents of reopening the 1989 settlement at that time used similar arguments to those that we understand are now set forth by the Government in the current request for a Curative Petition. A second attack was made on the settlement in 2006 by NGOs. Once again, the Government of India defended the settlement and the India Supreme Court held in 2007 that “it [re-opening] cannot be done and the said issue has been decided by this court.”

It is instructive that the Government of India opposed the 2006 attempt to reopen the 1989 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.

Nothing has changed that would justify the Union of India's change in position.

What are the next steps for the Curative Petition?
In 2011 The Dow Chemical Company (TDCC) and Union Carbide Corporation (UCC) separately filed their respective responses to the Curative Petition and to various applications filed in the matter by NGOs who are seeking to intervene in the matter. In January 2019, the Indian Supreme Court announced that it would schedule a hearing on the Curative Petition in April 2019.

What role has the Union of India played in the aftermath of the Bhopal Tragedy?
In its 1991 reaffirmation of the 1989 Bhopal settlement, the India Supreme Court required the Union of India to make up for any potential shortfall in the settlement amount 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. The Union of India did not challenge these directives from the Supreme Court when this ruling was issued. In fact, the 1991 Review Petitions challenging the settlement were filed by NGO Groups and not by the Union of India.

The settlement fund was sufficient to compensate all claimants who met the Government’s qualifying criteria, paying them double the amounts the Government of India set as fair compensation. Therefore, any question regarding additional payments as a result of the Bhopal tragedy should be directed to the Government of India.

The Union of India has also filed a “transfer petition” related to the environmental litigation that is pending in the Madhya Pradesh High Court against Union Carbide (UCC) and The Dow Chemical Company (TDCC). What is this petition about?
The Union of India is a respondent in the Bhopal plant site environmental litigation, as is the state government, in addition to the corporate parties UCC, TDCC and Union Carbide India Limited (UCIL). The claims in that case are related to pollution from the plant’s operations, not to the gas release, and were not part of the UCC-UCIL settlement in 1989.

Nevertheless, the Government of India now seeks to combine this entirely separate lawsuit with the Government's Curative Petition related to the 1989 settlement, and is requesting its transfer to the Supreme Court, despite the fact that the claims and parties are different, and that the Madhya Pradesh High Court has been managing this litigation for the past ten years.

TDCC has asked to be released from this lawsuit because it does not conduct business in India. TDCC further believes that a transfer is inappropriate, legally improper, and will unnecessarily conflate the historic issues of the settlement's validity with the unresolved and unrelated issue of claimed pollution from the plant site that has nothing to do with the gas release.

Has Dow accrued any liability for this on its balance sheet?
No. We do not believe that an accrual is appropriate or necessary. Neither Union Carbide Corporation nor TDCC has ever been found liable in the Bhopal tragedy, and this Curative Petition should not change that even if it were accepted by India’s Supreme Court.
 

Bhopal Site Remediation

Is there groundwater contamination at the site?
According to media reports, various groups have made assessments of the groundwater quality at the Bhopal site through the years. These reports have had varying conclusions. In a report to the State of Madhya Pradesh dated June 2010, India's National Environmental Engineering Research Institute concluded that the "groundwater in general is not contaminated due to seepage of contaminants from the UCIL" plant site. This conclusion is consistent with NEERI's earlier findings that all groundwater samples tested were within drinking water standards. By 2010, Union Carbide India Limited (UCIL) no longer controlled the site in any event. If there is subsequent contamination, it is the responsibility of the Madhya Pradesh government, which took over the site in 1998.

Who should clean up the Bhopal plant site?
Responsibility for the clean-up of the Bhopal site lies with the Madhya Pradesh State government. In 1998, several years before UCC became a subsidiary of TDCC, the Madhya Pradesh State Government took over the facility and assumed all accountability for the site, including the completion of any additional remediation. The Bhopal plant site remediation is currently the subject of separate litigation in the High Court, State of Madhya Pradesh.

Previously, three lawsuits were brought in the United States federal court in New York, seeking to hold UCC liable for alleged damages caused by pollution at the plant site. All three cases were decided in favor of UCC, and the decisions exonerating UCC were upheld on appeal.

Notably, in June 2013 the U.S. Court of Appeals for the Second Circuit ruled that UCC is not liable for any environmental remediation or related site environmental consequences at the Bhopal plant site in India. The Court stated: “[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.”

For further details on the U.S. cases -- to which Dow was not a party -- see Union Carbide's "Bhopal Litigation in the U.S." page at http://www.unioncarbide.com/bhopal.

The 2010 Curative Petition also seems to seek recovery of remediation costs, unrelated to the 1984 gas leak, to clean up the Union Carbide India Limited (UCIL) plant site. The State of Madhya Pradesh, however, is in the best position to evaluate all available scientific information, to complete whatever remediation may be necessary and to make the right decision for Bhopal. In 2010 the Ministry of Chemicals and Fertilizers of the Government of India announced that the clean-up would be undertaken and completed by the state. This commitment should be honored.

Some say that the amount of funding needed to help survivors and their families was underestimated in the initial settlement. If that is so, and if more money is needed, will it come from The Dow Chemical Company (TDCC) or Union Carbide (UCC)?
The Supreme Court of India has previously considered and rejected the argument that additional funds might be required by any parties to the settlement agreement. The settlement of $470 million, which ultimately resulted in payouts to victims of nearly double that amount, was negotiated between the Government of India and UCC and Union Carbide India Limited (UCIL), and approved by the Supreme Court of India in 1989. In 1991 and 2007, the Court considered the adequacy of the settlement, including input from a variety of stakeholders, ruling each time that it was fair and adequate. In its 1991 reaffirmation of the 1989 Bhopal settlement, the Court required that the Government of India be responsible for any potential shortfall in the settlement account.

Indeed, as recently as 2006, the Government of India filed an affidavit with the India Supreme Court asserting that the settlement was appropriate and reasonable and that it should not be revisited. In its 2007 decision, the India Supreme Court agreed with this view. At that time, it was noted that the actual amount awarded to individuals and families had been higher than prescribed, with no new claimants stepping forward. In fact, the Government of India, through its Welfare Commissioner, reaffirmed the fairness and completeness of the 1989 settlement agreement and its implementation in November 2010.

If The Dow Chemical Company (TDCC) is not responsible to the victims of the gas release, who is responsible?
The Government of India has paid all claimants it deemed were qualified to receive compensation. In its 1991 affirmation of the 1989 settlement between the Union of India, UCC and Union Carbide India Limited (UCIL), the Supreme Court required that the Government of India be responsible for any potential shortfall in the settlement account and for acquiring a medical insurance policy to cover 100,000 people who might later develop symptoms shows to have resulted from being exposed during the gas release.

What role has the Government of India played in the aftermath of the Bhopal Tragedy?
The Government of India established the qualifying criteria for claimants and administered distribution of the settlement fund.

In its 1991 reaffirmation of the 1989 Bhopal settlement, the India Supreme Court required the Government of India to make up for any potential shortfall in the settlement amount 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. The Government of India did not challenge these directives from the Supreme Court when this ruling was issued. No such shortfall occurred. In fact, the settlement fund was sufficient to compensate all qualified claimants at double the amounts the Government of India set as fair compensation. Therefore, any issue regarding additional payments should be resolved directly by the Government of India.

Criminal Proceedings

What does it mean for The Dow Chemical Company (TDCC) that the Bhopal court has issued the company a notice to show cause in the criminal case?
The Court’s notice to TDCC is a procedural step – merely a request for TDCC to appear to show cause why an NGO application should not be granted. It is not a determination that TDCC is liable or responsible for the gas tragedy. The application seeks to force TDCC to produce UCC for a criminal trial. It was filed by NGOs and not the prosecutorial authority, which is the government. It is not a summons nor does it make TDCC a party to the proceeding. To date, TDCC has not been served with the notice in the manner required under Indian law.

Any efforts to directly involve TDCC in legal proceedings in India concerning the 1984 Bhopal tragedy are without merit. The Indian criminal court has no jurisdiction over TDCC, and therefore cannot compel TDCC to take any action. Moreover, TDCC and UCC are separate companies. TDCC has no liability for Bhopal and any attempts to attach the company to the criminal matter are highly inappropriate, as criminal liability cannot be transferred from one entity to another. In addition, UCC is not subject to the jurisdiction of the criminal court in India.

What does the Bhopal issue and related litigation mean for Dow businesses in the region and does this change our position regarding growth in the region?
Dow does not conduct business directly in India. The Dow presence in the country involves separate affiliated companies.

Why does The Dow Chemical Company (TDCC) claim that the Indian courts do not have jurisdiction over the company?
The lack of jurisdiction over TDCC in India means that the Indian courts cannot compel TDCC to appear in court, take any action or pay any judgment. TDCC's corporate relationship to UCC does not give the Indian courts jurisdiction over TDCC in Bhopal-related matters. Moreover, UCC did not become a TDCC subsidiary until some 16 years after the Bhopal gas leak. UCC remains a separate corporation with its own assets and liabilities. TDCC itself does not conduct business in India; separate affiliated companies do. The fact that other TDCC indirect subsidiaries may conduct business in India does not give rise to jurisdiction over TDCC itself.

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