Supreme Court Approves Historic $470 Million Settlement in Bhopal Gas Disaster Case

Landmark ruling mandates Union Carbide Corporation to pay $470 million to Union of India for compensation, ending all civil and criminal proceedings related to the tragedy

In a landmark judgment delivered on May 4, 1989, the Supreme Court of India, in a large bench consisting of Chief Justice R.S. Pathak and Justices E.S. Venkataramiah, Ranganath Misra, M.N. Venkatachaliah, and N.D. Ojha, approved an overall settlement between the Union of India and Union Carbide Corporation (UCC) regarding the Bhopal Gas Leak Disaster, one of the worst industrial catastrophes in history.

The Court, after detailed examination of voluminous evidence, pleadings, and prior proceedings both in India and the United States, recognized the immense human suffering caused by the disaster that claimed approximately 2,660 lives and injured tens of thousands more. Emphasizing the urgency of delivering immediate and substantial relief to the victims, the Court held the case was eminently suitable for a comprehensive settlement covering all claims, rights, and liabilities arising from the disaster.

Union Carbide Corporation was directed to pay a sum of USD 470 million (approximately Rs. 750 crores at the prevailing exchange rates) to the Union of India on or before March 31, 1989. The payment was structured to include USD 425 million from UCC and a rupee equivalent of USD 45 million from Union Carbide India Ltd. This settlement was made in full and final discharge of all civil and criminal claims arising out of the disaster, and accordingly, all related court proceedings, including criminal cases, were ordered to be quashed.

The Supreme Court explained that the compensation amount was arrived at after rejecting conventional standards for fatal accident claims, which would have grossly underestimated the damages in this case due to the scale and gravity of the disaster. Instead, the Court adopted a broader principle inspired by the earlier M.C. Mehta v. Union of India case, emphasizing that compensation must have a deterrent effect on large industrial enterprises engaging in hazardous activities.

The Court estimated around 3,000 fatal cases and 30,000 cases of serious personal injuries, allocating substantial sums to different categories of victims based on the severity of injuries. The settlement also included provisions for medical treatment, rehabilitation, and other relief measures for the victims.

The judgment acknowledged the complex socio-economic and technological issues raised by the disaster, calling for the evolution of a national policy to regulate hazardous industrial technologies and protect public interests. It highlighted the need for collaborative efforts among jurists, technologists, economists, environmentalists, and public health experts to develop appropriate legal and policy frameworks.

While the Court refrained from pronouncing on some broader legal questions concerning multinational corporations’ liability and technological hazards, it underlined the necessity of urgent relief for the victims over protracted legal battles. The judgment also cautioned that any material showing that UCC had earlier offered to pay more than USD 470 million could prompt the Court to reconsider the settlement.

This historic ruling, balancing humanitarian urgency with legal prudence, marks a significant chapter in Indian jurisprudence and industrial liability law. It seeks to provide immediate relief to the survivors of the Bhopal disaster while setting a precedent for handling future industrial catastrophes with speed and equity.

Statutory provisions:- Bhopal Gas Leak Disaster (Registration and Processing of Claims) Act, 1985

This news report summarizes the Supreme Court’s orders dated February 14, 1989, February 15, 1989, April 5, 1989, and May 4, 1989, in the case of Union Carbide Corporation v. Union of India, which authorized a historic settlement to compensate victims of the Bhopal Gas Tragedy.

Union Carbide Corporation v. Union of India, (SC) : Law Finder Doc Id # 88947