‘Unprecedented, Ludicrous’ : Indian Judge’s Ruling on Bhopal Surprises Analysts

An Indian judge’s attempt to force Union Carbide Corp. to pay $270 million in interim relief to victims of the Bhopal chemical disaster is “unprecedented” and “ludicrous,” analysts said Thursday.

After ordering the Danbury, Conn.-based company to pay the $270 million, a judge in Bhopal, India, on Thursday asked the company to comply within two months.

Union Carbide spokesman Earl Slack said, “We are reviewing the court order and considering the actions we’ll take.”

Some analysts said the judge’s order could pave the way for more negotiations that could lead to an out-of-court settlement, while others feared the case would go to trial and drag on for years.

India filed a $3-billion lawsuit against Union Carbide for the gas leak on Dec. 3, 1984, which killed at least 1,500 people and injured 50,000. The government has charged that the company was negligent, but Union Carbide maintains the plant was sabotaged. Earlier this month, the Indian government filed criminal charges, including homicide, against the company and several executives. Attempts to reach an out-of-court settlement have failed.

“This is unprecedented,” said Garo Armen, a chemical analyst for Dean Witter Reynolds Inc. in New York. “You cannot ask a company to put money into the form of interim relief unless you’ve established liability or the company agrees because it constitutes a portion of a settlement.”

Surprised by Decision

He also noted that “Carbide is legally not obligated to obey any decision because there is no legal precedent by which you can essentially establish liability in an Indian court and come to the United States and collect the money without the courts.”

Armen said he has “discounted the possibility of a settlement.”

George Krug, a chemical analyst for Eberstadt Fleming, said he was surprised by the judge’s decision.

“I didn’t think it would be that much,” he said. “To me, this is sort of tantamount to the judge finding them guilty.”

Analysts agreed that Union Carbide could afford to pay the interim relief.

“I don’t think there’s too much of an impact on the financial side because they do have insurance,” Krug said. The company’s insurance, which should cover about $200 million in liabilities, will be its “first line of defense,” he said.

“They can afford to pay it,” said Leslie C. Ravitz, a vice president at Salomon Bros. in New York. “Financially, it doesn’t cripple them.”

Push for Settlement

But Ravitz said the judge “has made a horrendous error.”

“This opens a Pandora’s Box of what is reasonable,” Ravitz said.