Here is something for legal eagles of the government of India to chew on: while Dow Chemical Company denies any responsibility for damages caused by Union Carbide in Bhopal, it has taken over all liability of Carbide for fighting out over 75,000 asbestos related law suits in the US. Dow/Carbide expects to incur liability costs of $839 million in the coming years. They have already spent a whopping $687 million in litigation costs, besides paying out $1,480 million to an unspecified number of claimants till date. Carbide became a subsidiary of Dow through a merger in 2001.
These facts, gleaned from the mandatory annual filing (Form 10-k) for 2009 submitted by Dow to the Securities and Exchange Commission (SEC) of the US on February 19, 2010, clearly establish that Dow has taken over Union Carbide liabilities for bodily damages caused by the latter’s commercial activities. In the case of Bhopal, Dow has consistently claimed that it had nothing to do with the massive gas leak disaster of December 3, 1984 in the pesticide plant run by Union Carbide.
In 1994, Union Carbide (USA) sold off its interest of 50.9% in Union Carbide (India) to Macleod Russel (India) which renamed it as Eveready Industries India. According to Dow, its connection with UCIL doesn’t exist because it took over the parent company only in 2001. But, according to N D Jaiprakash, one of the petitioners in the lawsuits on Bhopal, Union Carbide (USA) had already been declared an absconder in 1992 and it is named in the chargesheet filed by the Union government. “All criminal liability, as also liability for clean up of contamination caused by Carbide prior to disaster naturally passes to Dow,” he explains.
In the US asbestosis cases, Dow is defending or settling the suits on behalf of Union Carbide as well as Carbide’s subsidiary Amchem Products Limited, which Carbide took over in 1977. In India, Dow is distancing itself from Union Carbide (USA), which in turn is washing its hands off its own subsidiary Union Carbide India Limited.
According to the latest Form 10-k filing by Dow, there were 75,030 unresolved asbestosis related claims at the end of 2009, including 24,146 claims against both Union Carbide and Amchem. There are over 50,000 individual claimants. Dow/Carbide settled 9,131 claims in 2009.
Of the $839 million estimated future liability reported in the 10-k filing, about 23% is for existing pending claims and 77% is for future claims. Asbestosis claims have arisen from thousands of people who were exposed to asbestos used by companies in the 1940s and 50s. Inhalation of asbestos fibres causes four categories of compensable diseases: mesothelioma; lung cancer; certain other cancers (colon-rectal, throat, intestines and stomach); and non-malignant conditions like lung damage. Claimants are seeking compensation for a variety of causes including negligent failure to warn, strict liability, breach of express and implied warranty, negligent infliction of emotional distress, enhanced risk of disease, medical monitoring, and civil conspiracy. A Supreme Court appointed committee said in 1991 that by 2015, about 265,000 people would have suffered damage from asbestos.
The 10-k filing of Dow also states that it is seeking recovery of $84 million from insurers for its asbestos liability, and $448 million as costs of defence and resolution of law suits in courts.
The similarities between the Bhopal disaster and asbestosis cases in US are striking in that both have led to
long term and severe bodily harm to people because of actions of the companies. But the attitude of Dow is strikingly different between US and India. In the US, Dow is responsible for what its subsidiaries (and their subsidiaries) did years ago. Hence, it is in the thick of litigation and forced to pay affected persons because of immense pressure from public opinion and judiciary. So much so that Dow admits that asbestos related claims, including future defence costs could have a material adverse impact on its consolidated financial position.
In India, Dow is denying any responsibility for what its subsidiary Union Carbide (USA) and its then subsidiary Union Carbide India did in the Bhopal tragedy in 1984.