Introduction
Described as the world’s ‘largest peacetime disaster’ (REF-Jubilee), the Bhopal catastrophe of December 3, 1984 lead to the immediate loss of 2,100 lives with 200,000 people suffering injuries. (REF-Litigation) Notwithstanding it further created a vortex of legal uncertainty and culpability which emanated a sense of corporate invulnerability within the industrial world. After what seems like an eternity Union Carbide Corporation (“UCC”) were finally made to pay a settlement of $465 million to the Indian Supreme Court. This sum and the process by which it was agreed sparked much controversy surrounding the punitive effects of industrial disasters.
This essay will look to demonstrate how a lack of appropriate regulation and human rights considerations in developing communities is creating this feeling of corporate invulnerability and will analyse some of the possible solutions going forward. Evidently, the Bhopal disaster will be at the forefront of the discussion, however other scenarios will be referred to in order to support the argument in question. It will begin by exploring the regulation surrounding Bhopal before looking at how the western corporations’ insatiable hunger for lower costs riddled with the developed or underdeveloped areas in which they operate’s appetite for development and economic prosperity make disasters more likely and thus invulnerability more probable. Consequently, it will finally move on to explore the need for Multi-National Corporations (“MNCs”) to have human rights obligations and look at the possible regulatory solutions to reduce and eradicate corporate tragedies and therefore this perception of impunity.
Lack of Appropriate Regulation & Regulatory Tolerance
Following the Bhopal disaster and in response to the vast number of claims, 145 lawsuits for damages against UCC in the USA and 6,500 against Union Carbide India Ltd (“UCIL”) in India (REF-Litigation), the Indian government enacted the Bhopal Gas Leak Disaster Act in 1985. This Act allowed the Indian Government an ‘exclusive right to represent, and act in place of (whether within or outside India) every person who has made or is entitled to make, a claim’ (REF-Library) originating from the Bhopal Disaster. The mass disaster litigation (REF-Jubilee) was first pursued in the US District Court however it was soon dismissed under the doctrine of ‘forum non conveniens’ (REF-Library) as it was decided Indian courts were more suitable. This was a setback for the Indian government who had a ‘settlement versus litigation’ (REF-Library) dilemma. Finally, on February 14, 1989 UCC were ordered to pay a ‘settlement’ of $470 million.
The Bhopal Gas Leak Disaster Act and its consequent settlement have been widely criticized as being too soft and thus creating this feeling of invulnerability. Most strikingly, within the meagre settlement finally paid, it conferred a blanket immunity on all criminal actions against the UCC in India. This clearly shows the inadequacy of the regulation in place with no criminal litigation being brought to trial. Moreover, the Indian government attempted to pinpoint the responsibility on UCIL, a subsidiary of UCC, through the new multinational enterprise liability theory established in M.C Metha v Union of India. (REF-Litigation) This theory states that “where an enterprise engages in a hazardous or inherently dangerous activity and anyone is harmed by the activity, the enterprise is strictly and absolutely liable to compensate all those affected by the accident.” (REF-Litigation) Although it seems as if proving UCC’s responsibility is straightforward the complex nature of MNCs makes pinpointing the accountability for damage caused by a subsidiary impossible. This therefore helps create the sense of immunity because it means proving UCC guilty is even more strenuous. Another criticism of the Bhopal legislative procedure regarding corporate invulnerability is the swiftness by which the courts litigated the matter. As Tim Covell rightly mentions “the pressing needs of the victims overrode the desire for judicial precedent.” (REF-Litigation) Instead of setting a precedent for future cases of corporate culpability and thus eradicating this feeling of corporate the feeling of corporate immunity the Indian government settled for a swift relief settlement which, riddled with the pathetic sum, was viewed as a ‘sinister surrender’ (REF-Litigation) to UCC. Finally, another incompetence of the Bhopal Gas Leak Disaster Act was the little punitive effect it created for UCC. After accounting and all the insurance cover, UCC’s liability was actually $237 million. This payment was less than half of UCC’s yearly profit in 1988 and following the settlement the company’s stock prices actually rose. (REF-Litigation) This lack of financial retribution created little deterrence for UCC especially considering they had caused one of the world’s greatest industrial disaster. Although one would expect this lack of economic indemnity to more widely occur in developing countries it can be perfectly represented in a case within the UK. At plant owned by Sonae in Kirkby, Liverpool a series work related accidents in 2003 which left a few workers severely injured and unable to work only led to a penalty of £40,000. This sum was roughly .04 of the company’s turnover for the previous year. Therefore it this lack of punitive effect which shows how little deterrence there is for MNC’s to adequately regulate their workplaces allowing for a perception of corporate immunity to be created.
‘Although no country is completely immune from instances of corporate human rights abuses, there is a noticeable bias: a great majority of human rights violations by MNCs take place in developing or underdeveloped countries.’ (REF-Library) It is clear to see the legitimacy of Surya Deva’s assumption not only by looking at Bhopal but also other similar industrial disasters around the world. There is reasoning behind this trend and it is a consequence of MNCs’ insatiable desire for profits riddled with economic growth and prosperity taking precedence over any environmental or safety matters in developing countries. This therefore results in slack regulations for MNCs providing no deterrence and little punitive consequences thus reincarnating this sense of corporate invulnerability. This is all clear to see within the Bhopal Disaster. UCC where swift to locate Bhopal as an ideal site for investment due to its central location and access to transport infrastructure. However, the specific site selected within the city was adequate for light industrial and commercial work, not for hazardous industry. (REF-Review) During this time facility also continued to operate with safety standards much inferior to those in its sister plant in West Virginia, USA. This relaxed control of foreign investment to prosper results in reduced environmental regulations to comply with the MNCs’ needs thus increasing the chances of an industrial disaster. Two years after the Bhopal Tragedy the Indian Government passed the Environment Protection Act to strengthen the environmental responsibility of the country as well as placing an emphasis on the significance of integrating environmental standards alongside future industrial development projects in India. After an industrial disaster of the magnitude of Bhopal’s it would seem logical to tighten up on regulating MNCs, especially environmentally. However, despite perceived greater commitment to public health and ecological matters, the Indian government have continued to implement policies in the last 20 years targeting the development of the country’s economic status. (REF-Review) This continued pursuit of prosperity at the expense of adequate environmental regulations helps fuel the perceived immunity of MNCs as they are allowed to continue operating as they wish long after a tragedy which should have set a precedent in situations of corporate human rights abuses.
Such need for economic development in sacrifice of safety regulations can also be seen in the Rana Plaza accident of 2013. After 1,134 lives were lost and around 2,500 were injured (REF-Guardian) when a five-story ready-made garment (“RMG”) factory collapsed it was described by the Economist as the ‘worst industrial accident since the Bhopal disaster in India in 1984’. (REF-Rana, Economist article?) As in Bhopal, protection of human rights is not a fundamental priority for the Bangladeshi government and despite ratifying the UN guiding principles which make it compulsory for the government to adhere to safety regulations in industrial dealings. The slack approach to human rights and the pressure to obtain profits results in abhorrent working conditions and meagre regulation making a disaster more likely. It is therefore the nexus between the state and businesses which bolsters human rights violations by corporations. This thus generates a feeling of immunity evidenced further by the feeble response from the government to avoid averting future investors, creating a lack of deterrence for the corporations to act malevolently. This conflict of interest is coupled with perceived corruption claims, present in Bhopal with the Indian government having a 22% stake in UCIL and more pertinently in Rana Plaza where the political situation has contributed to the worsening of human rights conditions.
Although it is certainly true that most of the human rights disasters and violations which occur as a result of economic development taking precedent over working conditions and regulations do occur in developing countries they also arise in the more deprived areas of prosperous countries. This is evidenced by the continuous human rights violations which occur at the Sonae plant in Kirkby, Liverpool, such as the death of an employee in 2011. The factory is located in a borough which was in desperate need of rehabilitation, being the fifth most deprived borough in England with the ward in which it is located ranking fifth worst in terms of employment opportunities. (REF-Social) Many regulatory concerns have been raised in terms of health & safety and environmental issues and there has been adjudged to have a ‘feverish level of regulatory oversight in terms of contacts, visits, inspections and enforcement action.’ (REF-Social) This is highlighted none more so by the Environment Agency’s continuous use of bargaining rather than formal enforcement and sanctions, with the latter only to be used if absolutely necessary, in order to avoid the deterrence of Sonae’s continued investment. Therefore, this toxic capital seems to not only be tolerated in Kirkby but rather the people have been forced to acknowledge at the cost of what seems to be practically no economic benefits. Deterrence therefore is not harsh enough for the risks which these corporate accidents can cause and until human rights obligations are placed above monetary objectives and adequate regulations are put into place it seems like these disasters will continue to occur and corporate immunity will persist.
The need for human rights obligations in Multi-National Companies
Furthermore, in order to diminish the number of human rights disasters and eradicate the feeling of corporate invulnerability corporations must adhere to certain human rights obligations by means of regulatory instruments. Milton Friedman once regarded that ‘the only social responsibility of business is to increase shareholders profits, for a corporation is ‘an instrument of the stockholders who own it’.’ (REF-Library) This section will critique Friedman’s statement by briefly discussing two reasoning’s behind the need for corporate adherence to human rights and will set the scene for the latter discussion of possible regulatory solutions to corporate invulnerability.
The first reason behind the need for businesses to have human rights obligations is what has been described by Elaine Sternberg as the ‘business case’ for human rights (REF-article referenced bottom of page 119 library). This explains how by adhering to human rights commitments not only will workers benefit but MNC’s would make more profit and achieve a competitive advantage in their industry. (REF-Libraryororiginal?) Although it is true that costs may rise through improving human rights norms, this assumption would be based mainly on the idea that such progress in human rights would lead to an upsurge in morale which consequently would lead to an increase in productivity. Moreover, it could lead to higher stakeholder investment after such become aware of the contribution to human rights realizations. An increased in safety standards would also avoid human rights disasters such as Bhopal and more recently the Gulf of Mexico Oil Spill, caused by a series of cost-saving decisions (REF-NY), saving the company money in settlement payments but more importantly saving thousands of lives. Despite the likelihood of this happening it is only a theory and would depend an array of many different issues such as consumer preferences and the extent of the improvement in human rights and/or productivity.
Another reason supporting the adoption of human rights considerations by MNC’s is that ultimately despite their perceived predatory pricing mannerisms they remain social players within society. (REF?) Although to a certain extent Friedman’s statement is accurate, conclusively organisations ‘consist of the people, operated by the people and exist for the people.’ (REF-Library) A doctrine which is pertinent here is that of the ‘Neighbourhood Principle established in Donoghue v Stevenson. (REF-case) This highlights that “You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour.” (REF-case) Despite the ambiguity of the term ‘neighbour’ this ruling can apply very much to corporations in that they should take reasonable care to not harm their neighbour as they are in the best position to be aware of the consequences of their actions. Thus, by complying with human rights obligations organisations will adhere to the neighbourhood principle as they are taking reasonable care not to injure their neighbour, both by improving working conditions but also by preventing human rights disasters. As a result by placing greater emphasis on human rights commitments and ‘humanising’ organisations they can reduce the perception of corporate immunity but also can potentially increase their profit margins.
Looking Forward
Developing on the above, this section will discuss some possible regulatory solutions to prevent human rights disasters and therefore extinguish the feeling of corporate immunity which still remains apparent. The first and main regulatory solution would be to implement an integrated framework of corporate regulation. This would ideally be a framework constituting of adequate integrated regulation coupled along with potential deterring sanctions. This regulation would stem from three different levels: institutional level, national level where by laws would be regulated by both the MNCs’ home and host country and international level through legal instruments regulated by an organisation such as the UN. Although the UN has previously tried to establish obligatory international regulations and frameworks, especially during the 1970s, and failed, John Ruggie’s “protect, respect, remedy” (REF-Rana) framework is a promising start and a clear example of the UN’s potential to adequately regulate MNCs’. Initiatives such as this coupled with further integrated regulations at national and institutional level will be able to, in a near future, hopefully control the human rights standards of MNCs as well as deter them from causing devastating industrial atrocities. As a consequence of such this holistic regulatory approach would then, at its most ideal, be capable of significantly reducing the chances of human rights disasters and would thus eliminate this continuous feeling of corporate invulnerability.
Realistically an integrated framework of corporate regulation would take some time to be completely put into place. Therefore, a shorter term and swifter solution as such to corporate malevolence would be an adequate disaster planning system. This would constitute devoting the appropriate resources to adequately plan in advance the disasters. An example of such planning could be to avoid placing hazardous industrial sites in places that do not have the infrastructure, expertise or resources to respond to industrial catastrophe. Another could also include planning the necessary responses in the case that one of such accidents does occur. This could be built used effectively by planning such responses but also by implementing it into new and existing legal instruments. Notwithstanding this method would perhaps implement regulations which would prevent human rights disasters but it would more effectively help manage human rights disasters to limit the consequences of such and minimally reduce corporate immunity to liability and prosecution. Nevertheless, adequate disaster planning is something which will no doubt be a key component within an integrated framework of corporate regulation.
Conclusion
Overall, from this essay it is evidently clear to see how a lack of appropriate regulation and human rights considerations in developing communities is creating this feeling of corporate invulnerability. The Bhopal tragedy was not only a devastating human rights disaster but it further led to a never ending, stagnated legal procedure which somewhat still remains alive today. It failed to not only adequately compensate the victims but it also failed in setting a precedent for cases of similar mannerism. It is also apparent to see how these industrial disasters are not confined to certain countries or cultures but can occur in prosperous countries as seen in Kirkby. Moreover, this essay also accentuates the need for corporations to have human rights considerations not just for the benefit of safety and working conditions but also for the interest of businesses and social obligations.
There is no doubt that with the adequate regulations and sanctions an integrated framework of corporate regulation riddled with adequate disaster planning would be the ideal manner of regulating human rights catastrophes however as of today an effective legal framework is yet to be put into place and if Bhopal were to occur again today it is difficult to see a more effective legal process in response to such. Looking into the future it will be important to detail what the actual objective of new regulatory instruments is because the extent and nature of future potential failures ‘depends upon the aim of the regulation’ as per Steve Tombs and David Whyte. (REF-SJ) Nevertheless, unless human rights atrocities are entirely eradicated a feeling of corporate invulnerability will always exist because no money or legal remedies can compensate someone for the suffering and loss caused by such human rights disasters, especially no the meagre $12,000 death compensation paid in Bhopal.