Tata FAQ #5: What is Dow Chemical’s response to demands for clean up and compensation?

Dow Chemical claims that because they only purchased Union Carbide Ltd. after the disaster, they are not legally liable to clean up the contamination caused by the now abandoned Union Carbide Factory. In August 2004, Dow made a submission to the court in which they state that “the said merger… did not disturb the status and independence of UCC and UCC survived the merger.” They therefore go on to argue that “they will not be able to accept any liability to serve and/or produce the alleged absconder UCC before this Hon’ble Court”. The court subsequently ruled that Dow must show cause why they should not be held accountable in making UCC stand trial. The Department of Chemical and Fertilizers has since launched an application in a Public Interest Lawsuit to the district court, asking that Dow pay Rs. 100 Crore ($22 million dollars) for the clean-up. Dow continues to refuse this liability. They have countered with an offer to make a voluntary contribution to clean-up efforts, but only on condition that this is not taken by the Indian Government to be their legal duty.
Why is this response unacceptable?
According to well-established merger laws, as the new parent company, Dow Chemical Ltd. also inherited Union Carbide’s liabilities. On January 9, 2002 Dow accepted Carbide’s liabilities in the US and settled a Texas asbestos lawsuit originally filed against Union Carbide. That Dow is now denying Carbide’s liability in India suggests an unacceptable global double standard. Allowing Dow to evade this liability in India would sanction the shifting of assets and undertaking of international mergers as a means of avoiding liability for disasters caused by a corporate plant.

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