Govt may clear Dow Chemicals path

The game is afoot: the PMO’s office appears to have made a significant move in its attempts to satisfy the wishes of the Dow Chemical company. As anticipated, the Law Ministry has prepared a note asserting that “the government can opt to settle out of court with Dow Chemicals as the latter does not own the financial liabilities of Union Carbide”. The opinion is evidently predicated upon a quite deliberate misinterpretation of US merger law. See here for an analysis of the actual legal position Dow inherited through its merger with Union Carbide.
Chetan Chauhan, Hindustan Times, October 22, 2007
New Delhi – The centre is all set to pave the way for Dow Chemicals to invest in India, by removing all “legal hurdles” related to the 1984 Bhopal gas tragedy, one of the world’s biggest industrial disasters that claimed thousands of lives.
The Department of Industries has moved a Cabinet note asking the government to absolve Dow Chemicals of all legal liabilities. The Chemicals and Fertilizers Ministry had earlier filed an affidavit in the Madhya Pradesh High Court seeking Rs 100 crore from the company as initial compensation.
The note provides for withdrawal of the affidavit and out-of-court settlement. It is based on the Law Ministry’s opinion that the government can opt to settle out of court with Dow Chemicals as the latter does not own the financial liabilities of Union Carbide, the main accused in the case. The Chemicals Ministry has opposed this view.
Dow Chemicals claims it is not liable to pay compensation because it did not inherit the liabilities of Union Carbide when it bought the company.
Magsaysay Award winner Sandeep Pandey, who is associated with the tragedy victims, described the move as cheating on the part of the government. “Allowing Dow Chemicals in India without paying the liabilities is a crime,” he said.
The government had sought the Law Ministry’s opinion after Dow Chemicals had expressed its wish to make huge investments in India, provided the legal hurdles were removed.
In April, the then Cabinet Secretary B.K. Chaturvedi had favoured settling the issue with Dow Chemicals “appropriately”. Even Ratan Tata had written to the Planning Commission and Finance Ministry earlier this year, recommending an out-of-court settlement.
The Tata group had even proposed a remediation fund to clean up 8,000 tonnes of waste at the tragedy site. Last year, four US senators and Dow Chemicals chief executive officer Andrew N. Livers had written to the Prime Minister seeking his intervention to settle the issue.
Within a year of these suggestions, the government has acted and the Cabinet will soon examine the proposal, a senior government functionary said.

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