NEWS OF THE WEEK
BHOPAL CASE TO INDIA: Ruling elicits mixed reactions Last week's order by federal judge John F. Keenan that litigation stemming from the 1984 gas leak disaster in Bhopal, India, be transferred from the U.S. to India was a mixture of good news and bad for almost all parties involved in the complex case. The long-awaited ruling, which came 15 months after most lawsuits filed in the U.S. were consolidated in federal district court in New York City, opened new avenues for action for some participants and closed all but a few for others. The ruling ended the first stage of the Bhopal legal process, but how much closer it brought the disaster's victims to compensation remains unclear. Both Union Carbide, which moved last summer to have the case dismissed to India, and the government of India, which argued to keep the case in the U.S., claimed victory after the opinion was handed down. A group of U.S. attorneys, however, who represent individual Bhopal victims and who would almost certainly be excluded from participation in and remuneration from the case were it returned to India, indicated they would appeal the order. The net effect of the ruling on Carbide and India, which claims sole representation of the Bhopal victims, remains ambiguous, because the judge's order was qualified by three conditions. He essentially agreed with Carbide's argument that India, where the victims are located, is the proper forum for a trial, thus rejecting India's contention that U.S. courts are better able to try a personal injury case of such magnitude and complexity. It has generally been assumed that each side's preference for a trial site was based on the belief that damage awards would be higher in the U.S. and that India would have a 4
May 19, 1986C&EN
Keenan: order qualified by conditions better chance of attaching liability for the disaster to Carbide, rather than just its Indian subsidiary, in a U.S. court. However, Keenan found merit in India's concern that it would have a hard time obtaining evidence from Carbide in India—where rules governing such procedures are narrower than in the U.S.—and enforcing a judgment made in an Indian court. He therefore conditioned the dismissal of the case on Carbide's agreement to subject itself to evidencegathering, or discovery, according to U.S. rules and to satisfy an Indian court judgment as long as it were reached through "the minimal requirements of due process." "Conditions such as these were not unexpected, but because of the judge's precise wording, we will have to review them before making any further comments," remarked Carbide chairman Warren Ander-
son, who said he was pleased that Keenan ruled India the appropriate trial forum. By press time last week, Carbide had not disclosed a decision to accept or appeal the ruling. Keenan, who did not set a deadline for a response when he issued his opinion, is expected to do so this week. The Indian government, meanwhile, says that although it failed to keep the Bhopal case in the U.S., it accomplished what it set out to do in filing its complaint against Carbide in the federal court a little over a year ago. India's goal all along, says Talmiz Ahmad of the Indian Consulate in New York City, has been to ensure that Carbide would accept Indian jursidiction. In December, Carbide said it would do so within the requirements of due process, but observers commented then that the qualification could give the company a basis on which to appeal in the U.S. any judgment ultimately handed down in India. But Ahmad says that India's status as a civilized nation with an established judiciary means it will have no difficulty fulfilling Keenan's proviso for the "minimal requirements of due process." The judge's other condition regarding discovery allays India's concerns about access to evidence, Ahmad says. Michael V. Ciresi, India's U.S. counsel, says he doubts Carbide will accept the conditions, because they give India what it wanted. According to Rob Hager of the Christie Institute, a religious and public interest group that filed a friend-of-the-court brief seeking to keep the case in the U.S., the ruling is "a clear loss" for the Bhopal victims. The judge's terms, he contends, add little to what existing law would give to the Indian judiciary's powers in the case. "India is taking the
decision surprisingly well/' he says. "That's for political reasons." From this point, the litigation could take several directions. Carbide could balk at the conditions and appeal the ruling. Observers do not expect India to appeal the ruling. Instead, many predict that India will establish special judicial mechanisms to speed the case through its courts in anticipation that ultimately it will have to return to the U.S. to enforce a judgment. An appeal by i n d i v i d u a l plaintiffs' attorneys, who India says have no right to represent the victims, could both delay the process and force the U.S. judiciary to deal with the issue of representation, which so far has been sidestepped. Also unclear is the ruling's impact on the chances for a settlement. A $350 million agreement reached by Carbide and the individual plaintiffs' lawyers in March collapsed after India rejected the figure. Before the ruling, it was widely thought that a decision to keep the case in the U.S. would impel Carbide to raise its offer to $500 million to $600 million, whereas a ruling in favor of the company's motion would make Carbide less willing to go above $350 million, approximately the sum of the firm's legal reserve fund and its insurance coverage. Now, observers say, a settlement may not become a real possibility again until a trial is concluded in India. Judge Keenan's 63-page opinion and order focused on the question of whether the U.S. or India would be the proper forum for the case, but, in doing so, touched on a number of issues regarding liability. He conceded, for instance, that business conducted at Carbide corporate headquarters may have been directly related to the development or operation of the Union Carbide India facility in Bhopal, but he concluded that since "almost all the relevant events leading to and following from the accident occurred in India," India was a better forum. Keenan wrote in conclusion: "This court is firmly convinced that the Indian legal system is in a far better position than the American courts to determine the cause of the tragic event and thereby fix liability." D
Shuttle inquiry opens Pandora's box at NASA In less than three weeks, President Reagan will receive the report of the Presidential commission that has been investigating the explosion Jan. 28 of the space shuttle Challenger. The explosion—74 seconds after liftoff, killing the shuttle's seven crew members—originally was viewed by many observers as an isolated hardware failure that perhaps no one could have foreseen and prevented. However, although the commission is still writing its report, the panel appears to have opened a kind of Pandora's box. It has revealed a series of errors of omission and commission that, in the view of many observers, cast serious doubt on the credibility and competence of the National Aeronautics & Space Administration and Morton Thiokol, maker of the shuttle's two solidfuel booster rockets. The accident has led to investigation of NASA's activities in general, and raised questions about future support for them. The agency, long considered a model of excellence, dedication, and efficiency, has been assailed by such n e w s p a p e r headlines as "Space Agency Hid Shuttle P r o b l e m , " "NASA Wasted Billions: Inspectors Repeatedly Warned Agency over Abuses and Mismanagement," and "NASA Cut Quality Monitors Since '70." And most recently, Thiokol has been charged with punishing two whistle-blowing engineers for their testimony to the panel. The commission has just released a transcript of more than 300 pages plus 25 related documents, from its final, closed-door hearing earlier this month. From this material and other revelations, it appears that the panel's report will deal both with the technical causes of the explosion and with the flawed management process within the agency that may have led to it. At the hearing, the panel berated NASA and Thiokol for repeatedly ignoring clear warnings about erosion problems with the fluoroelastomer O-rings used to seal joints between casing sections in the booster rocket. NASA and Thiokol were long aware of flaws in the joints and erosion in the O-rings during
previous shuttle flights, thé transcript and documents show, and were warned that those problems could lead to disaster. Yet in memo after memo, NASA waived "launch constraints" forbidding shuttle flights without correcting the problem. It appears that the panel will conclude that those design defects in the booster joints combined with temperatures colder than any previously experienced at launch time led to failure of the O-ring seals in the right booster rocket of the Challenger. That allowed hot gases to blow by the seal and spew out the side, causing the explosion. NASA is setting July 1987 as the target for resumption of shuttle flights, after redesign and testing of the shuttle propulsion system. However, with a re-evaluation of the whole U.S. space program triggered by the Challenger explosion, this target date may slip. And a shift in the shuttle's mission may be considered. One proposal is to shift from launching commercial and foreign satellites to focus on the large backlog of military payloads. D
Grace to sell its restaurant businesses For all the folks who have scoffed in the past at W. R. Grace's pretensions to be a chemical company, it will certainly become one soon. The sale of its restaurant businesses announced earlier this month, plus the divestiture of its retailing group, leaves chemicals in the driver's seat, accounting for almost 70% of the company's sales, based on 1985 results. Grace's board of directors has approved in principle a leveraged buyout plan for the company's $1 billion restaurant group. The buy-out would be led by Anwar Soliman, a Grace executive vice president and group executive of the restaurant group, his existing management team, and Drexel Burnham Lambert, investment bankers. Grace will retain a 49% common equity interest in the restaurant venture. Grace also announced the sale of May 19, 1986C&EN
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