Lawrence Summers has several introductions. Right now, he is the director of President Obama’s National Economic Council. He created controversy in Harvard. But an earlier controversy from 1991 is almost forgotten. That was when he was at the World Bank and signed a memo that was probably written by Lant Pritchett. The memo said, “The economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable.” Environmental costs, wage costs and valuations of human life are lower in developing countries like India.
While Bhopal gas disaster and the consequent human tragedy is understandably an emotive issue, one can’t get away from some facts. First, one can’t compare compensation in India with compensation in the US, even if one adjusts for PPP. It is one thing to say that average final compensation for personal injury at Rs 25,000 is low. But benchmarking this against disaster compensation in the US, as media has been wont to do, is unwarranted. Second, tort law is relatively underdeveloped in India, despite social justice constituting a recurrent theme in the Constitution. In many instances, tort law isn’t even codified, not uncommon in common law jurisdictions. Let’s not forget the Environment Protection Act of 1986 was triggered by Bhopal.
Third, related to the second point, why have damages? For the wrong committed, there is an element of compensation. This is static aspect of law. To prevent such injuries in future, there can be a punitive element. This is dynamic aspect of law. Punitive damages are rare (almost non-existent) in India and again, there is not much point making comparisons with the US. Fourth, our law is still hazy on liability of a parent company (UCC) vis-à-vis liability of its subsidiary (UCIL). We are on even weaker ground if UCC is subsequently bought over by Dow Chemical Company and let’s not forget that Dow didn’t purchase UCIL.
Fifth, contrary to popular perception, courts don’t create law. They interpret it. At best, there can be deviation from this principle on constitutional issues. Therefore, if a Bhopal Gas Leak Disaster (Processing of Claims) Act is passed in 1985,