One year after the poison gas leak that killed more than 2,000 people in Bhopal, India, the Indian government and the Union Carbide Corp. are locked in an increasingly nasty legal brawl that threatens to delay any compensation for the victims for years into the future, according to legal experts, company officials and others involved in the case.
With the collapse of settlement talks between the two parties last summer, Union Carbide Corp. has taken a tough stand against the avalanche of multibillion-dollar lawsuits filed over Bhopal, raising charges of improper conduct against U.S. lawyers and threatening to tie up the case with legal maneuvers for the rest of the decade.
Carbide's more assertive posture in part reflects a growing view both inside and outside the company that it has now weathered the worst of the Bhopal storm.
Its stock, which took a beating in the days after the disaster, is now selling at well above pre-Bhopal levels, and at least some Wall Street professionals view the firm as a potentially attractive takeover candidate.
But it is also a sign of the evolution of Bhopal from an international tragedy into a mass toxic-tort case of astronomical dimensions.
Facing more than 100 U.S. personal-injury lawyers in a New York court, the company has turned the matter over to its own defense lawyers and gone on the counterattack.
Where once it openly accepted "moral responsibility" for the disaster, it now talks more about blaming the Dec. 3, 1984, accident on sabotage -- a claim that critics charge is legal "posturing" designed to escape liability for the world's worst industrial accident.
"It's clear that the initial euphoria that this case would be quickly settled has dissipated," said Kenneth Feinberg, a Washington lawyer and expert in mass-tort cases. "What you have now is a war of attrition where both sides are hunkering down. . . . The perception is that this is going to be a prolonged legal struggle."
"We haven't changed our attitude or wavered at all," insisted Warren Anderson, Carbide's chairman, in a recent interview. "I've always felt that settlement is the way to go. But when you're in litigation, you're in a different arena. . . . This is what's so sad. If you go the litigation route, you know you're talking about six, seven, eight, nine years."
What that also means, according to many legal observers, is that more than 70,000 Bhopal survivors, many of whom are still reportedly suffering from respiratory problems, tubercular diseases, congenital deformities, and other ailments, will not receive the financial assistance or medical treatment they need any time soon.
U.S. doctors who have visited Bhopal in recent months say that as many as 60,000 residents are suffering from a condition called fibrosis of the lungs -- the permanent erosion of lung tissue that causes extreme shortness of breath, throat irritations, and other symptoms. An Indian study of 2,430 pregnant women in Bhopal found 336 abortions, 82 stillbirths and 30 cases of congenital deformities among the children who were born.
Even efforts to get emergency aid to the victims have been stalled by the legal bickering: Last April, U.S. District Judge John F. Keenan, in whose court most of the Bhopal lawsuits have been consolidated, urged the company to make an immediate emergency relief payment of $5 million for the victims.
Carbide publicly agreed, but insisted that Indian authorities provide a detailed accounting of how it was spent -- a condition the Indian government angrily rejected as "insulting and onerous." Just last week, after seven months of wrangling, the parties finally agreed for the interim payment to be funneled through the Indian Red Cross.
"It's frustrating, but it's incredible," said Bud Holman, a partner in the New York law firm of Kelley, Drye & Warren, who is spearheading Carbide's defense in the lawsuits. "You've had a very good year for the lawyers, but not a very good year for the people who need help. . . . These cases will ultimately be settled, but they should have been settled a long time ago."
Anderson said the company remains willing to "sit down any time, any place" to negotiate an overall settlement of the case, but asserted that it was up to the Indian government of Rajiv Gandhi to adopt a more accommodating and less "antagonistic" stand. "The ball is in their court," he said.
Such comments by Anderson and other company officials reflect an emerging Wall Street consensus that Carbide is likely to escape the litigation without a crippling settlement. The Danbury, Conn.-based company three months ago announced a massive restructuring -- including the layoff of 4,000 workers and the sale of hundreds of millions of dollars in plants and other assets -- that has won applause from Wall Street analysts. The company's stock closed Friday at $63.67 a share -- well above the $48 it sold for before Bhopal.
Analysts say the recent strength of Carbide's stock mostly reflects speculative fever: investors gambling on a prospective takeover bid by the GAF Corp., a Wayne, N.J.-based firm, which has already bought about 10 percent of Carbide's stock. But while the takeover threat has undoubtedly worried company management, it is also a sign of Carbide's recovery -- a perception by at least some Wall Street professionals that Carbide's "contingent liabilities" are not so great as to deter buying up the company.
"Obviously, there are some people out there who feel that this is all going to blow away and that Carbide will still be solvent when the whole thing is over," said Harvey B. Storch, an analyst with the Wall Street firm of Fahnestock & Co.
All that might have seemed improbable only a year ago when, on the morning of Dec. 3, a toxic cloud of MIC escaped from the Union Carbide plant and floated over the sleeping city of Bhopal. Thousands of screaming residents, many of them blinded, vomiting and frothing at the mouth, fled toward local hospitals. While the total number of victims is still a matter of debate in India, the government now says it is aware of 1,757 deaths and about 200,000 injuries. Indian public-interest groups and journalists put the death toll much higher, with estimates ranging from 2,500 to 10,000.
In the wake of the disaster, U.S. lawyers, such as Melvin Belli, flocked to the scene and signed up tens of thousands of survivors on attorney-retainer forms, usually with standard contingency-fee clauses assuring lawyers one-third of any ultimate award.
At latest count, 121 lawsuits seeking substantially more than $100 billion in damages have been filed against Carbide in the United States on behalf of 103,000 Indian plaintiffs. The Indian government filed its own suit last March and retained a U.S. law firm to represent it. Another 3,981 lawsuits have been filed in India, including 485 that name the Indian state of Madhya Pradesh as a codefendant and another 162 that name the Indian government as codefendant.
The plant itself was owned by Union Carbide India Ltd., of which Union Carbide owned 50.9 percent and Indian investors the rest.
The prospect of huge damage awards by U.S. juries sent Carbide stock tumbling and raised fears about a possible bankruptcy.
But, led by attorney Holman, Carbide has since taken the offensive, challenging the validity of many of the suits on the grounds that as many as 30 percent of the plaintiffs are "duplications" -- an indication, he contends, that some U.S. lawyers were buying retainer forms on the Indian black market.
"There's massive unprecedented duplication in the lawsuits," said Holman. "The clients don't know who the lawyers are. The lawyers have never spoken to their clients. . . . Most of these people have just one name, they're illiterate and they live in a slum with no specific address. You'll get names of plaintiffs that will say, 'Khan by the railway station' or 'Khan at the water tank.' "
If the suits were to come to trial in the U.S., Holman said, Carbide would insist that all of the 103,000 plaintiffs be flown to the U.S. and show up in court -- a notion he and others acknowledge would overwhelm the court system. "We're entitled to defend ourselves and that includes examining every one of these people that wants money from us," he said.
U.S. lawyers say that scenario is absurd, and that trials of only 10 representative plaintiffs would be sufficient to force Carbide to settle. But their reaction to such Holman comments pales next to their anger over his sabotage argument -- a theory that, plaintiffs lawyers say, has no basis in reality.
Carbide first raised the possibility of sabotage on March 20 when it released its own report on the disaster. The company concluded that the MIC release was caused by between 120 and 240 gallons of water that was either "deliberately or inadvertently" pumped into a MIC storage tank, setting off a runaway chemical reaction.
But in court papers and public comments, Holman and other company officials have recently gone beyond that. Jackson B. Browning, Carbide vice president for health, safety, and environmental affairs, said in a recent speech in London that Carbide has "all but ruled out everything except a deliberate act." In one court filing, Holman introduced as an exhibit an article from the Danbury, Conn., News-Times that allegedly supports the sabotage theory.
The article quotes an Associated Press account out of India, which in turn quotes a Sikh leader as saying that last June he saw posters in a Sikh temple put up by a terrorist group called "Black June" claiming credit for the Bhopal disaster.
The posters were later taken down and no other Indian official has verified seeing them or even the existence of a group called "Black June." Bhopal is a predominantly Moslem area and company officials acknowledge they have no evidence of any Sikh political activity in the city at the time.
Holman is undeterred. "It's circumstantial evidence, but you have to take them the Sikhs seriously," he said. "Sikhs have assassinated the prime minister. Sikhs were involved in blowing up a bomb in the [Air India] airplane that crashed in the Atlantic June 24 . . . . I don't know that Sikhs did it, but they are capable of heinous acts, they are capable of terrorism."
The sabotage argument "is the product of a runaway imagination," charged Michael Ciresi, the chief U.S. lawyer for the Indian government in the case. "Six days after they released their report, Warren Anderson admitted they have no evidence whatsoever of sabotage. So who's kidding whom here? It's just another smokescreen, another diversionary tactic."
Whatever the merits of the sabotage theory, law professors and legal analysts say Carbide is on stronger ground in its current motion to dismiss all the U.S. lawsuits on the grounds that they belong in the India courts. The company is relying on a well-established legal doctrine that holds that a lawsuit should be tried in the most convenient courtroom.
"The case is overwhelming for these suits to be in India," said Holman. "The accident took place in India. The plant was run by Indians. . . . All the claimants are in India. All the evidence is in India."
But the legal observers say Carbide's defense was thrown a "curve ball" by the Indian government's decision to pursue the case in U.S. courts and by India's own statement, during a recent discovery proceedings, that its court system is inadequate to handle the suits.
India's U.S. lawyers have also advanced a novel legal theory called "multinational enterprise liability" that argues that U.S. multinationals should be held legally responsible for the operations of its overseas subsidiaries -- a claim, they say, is bolstered by the fact that the Bhopal plant was designed and ultimately supervised by Carbide officials in Danbury.
The question of where to try the case, which is only the "threshold issue," has been scheduled for oral argument Jan. 3, one year and one month after the accident took place, and a ruling probably won't come until sometime in the spring.
But as tortuously slow as the U.S. legal process may seem, Ciresi, the Indian government's lawyer, said that Carbide wants to ship the lawsuits back to India because there the courts are even slower.
"The reason Carbide wants to get back to India is because there the system would take so long and because they would be able to appeal everything," said Ciresi. "They could take 25 years to litigate this, and by that time, all these people would be dead."