Business Law and Ethics: A Case Study on the Bhopal Gas Tragedy

This report discusses the importance of business law and ethics in organizations, focusing on a case study of the Bhopal gas tragedy and the ethical issues faced by Union Carbide. It explores the impact of business laws and ethics on business operations and functions.

Business law and ethics

Table of Contents
INTRODUCTION................................................................................................................................2
MAIN BODY.......................................................................................................................................3
PART B.................................................................................................................................................3
Ethical issues at Union Carbide..................................................................................................3
CONCLUSION....................................................................................................................................6
REFERENCES.....................................................................................................................................7
Books & Journal:........................................................................................................................7

INTRODUCTION
In organisations, wide range of functions, operations and business activities are executed.
Business law and ethics are important for organisations which are to be considered so that goals as
well as objectives are achieved in proper manner (Basha, 2020). These rules or legislations have
wide impact on business operations and functions. In business, it is crucial to focus on rules &
regulations on basis of which everything is carried out appropriately. It is seen that it is necessary
for enterprises to hire legal practitioners within management which brief them about government
laws, & other information. This report is based is on Bhopal has tragedy. Main aim of this report is
to understand the importance of business laws as well as ethics. This report gives brief information
about how business law as well as ethics have impact on business.
MAIN BODY
PART B
Ethical issues at Union Carbide
In business, it is important for enterprises to focus on ethics as well as values with aim to
survive for longer time interval. The given case study is based on Bhopal gas disaster: corporate
negligence with consequences and study of Union Carbide. The tragedy is to be also known as
“Hiroshima of chemical industry”. On December 3, 1984, MIC which is also known as methyl iso
cyanate which is a toxic gas and got leaked which resulted in destruction to Bhopal city cloud,
Madhypradesh, India. This plant in Bhopal was owned by Union Carbide which is American
company & is currently owned by Dow Chemical company. Union Carbide was founded in 1917,
in U.S. It has wide range of subsidiaries such as Amerchol Corporation, Dow ST. Charles
Operation, and many more. It has many competitors such as Equistar Chemicals, Occidental
Chemical, Petro Rabigh etc. When Bhopal tragedy happened, company stated that around 3,800
people were died & thousands of people became permanent disable toxic gas. This created a
massive a derestriction to city of Bhopal. Media and news paper attacks on company and its
resources (Ladleif, 2019). This leads to negative impact on goodwill of a brand. Further, at same
time they reduce their employee size to save costs. Indian Government seized the plant and filed a
case against Mr. Anderson of not assisting victims. After four months of disaster, entity offered a
sum of $7m as relief after government of India filed a lawsuit in U.S court seeking $3bn in
damages. In this tragedy of Bhopal, many legal and ethical issues were faced by firm. In this
situation, ethical position of company matches with Utilitarianism. It is a situation in which it
refers to analysing actions and rights relying on consequences (Le Menestrel, 2021). UCIL played a

role of irresponsible business in this tragedy as CEO of firm was not taken to jail and no effective
actions were to be taken by management or court. It is crucial for entity to examine the ethical
position in business so that it is easy to take essential steps. After the tragedy, thousands of many
people and NGOS campaigning for justice for victims for 25 years as the death number was huge.
Around 7000 people were killed within first 72 hours of leak. Kruna Raina, who is Greenpeace
India campaigner who leads Bhopal Gas Campaign stated that it victims number is huge & they
wants justice for cause (Ponterotto, 2017).
Further, it is was also examined that no appropriate amount allotted to victims was also not
enough for their recovery as tragedy was big and affected health as well as lives people at wider
level. Moreover, local authorities and government are also to be considered as responsible because
of they are one who are liable for establishment of strategies, measures ans safety to deal with such
uncertain situations. Many legal cases as well as complaints were filled against UCIL at that time in
1984. The most shameful things was that CEO was not arrested & no decisions were taken against
leak of gas in city. It was important for company to provide safety & amount to recovery of victims.
Also, it s analysed that it is crucial to take responsibility of consequences so that it is easy to
execute business activities in effective way. Further, ethical position of company in this situations
was to be known as irresponsible and negligence of CSR. When this tragedy occur, company went
into debt & it was then takeover by Dow Chemical company. Indian Government failed to receive
positive response from U.S court and which created more worst situations for peopl (Raghunandan,
2020).
In business perspective, it is necessary to focus on ethical values and issues on basis of
which it is easy to make strategies, decisions making in most efficient way. Due to external and
internal factors, ethical issues arises & impacts upon overall organisational structure at larger scale.
Thus, to execute everything in proper manner it is necessary to gather information which are related
with ethics & laws. American Union Carbide Corporation should apply a U.S. Safety and
environmental standards because country where they operate (India) has not implemented a safety
and environmental standard. The company should apply with more strictly standard so that hey are
able to face such uncertain situations. In 1973, the Indian parliament had passed the Foreign
Exchange Regulation Act (FERA), which aimed to increase state control over foreign business
ventures (Rendleman, 2018). The act reduced amount of equity that a foreign corporation could
provide to any given project, in order to dilute foreign ownership of Indian-based firms. Under this
act, Indian government were having right to ask for payments of their loss in city of Bhopal and
victims who loss their relatives lives. Moreover, it is also examined that government of Bhopal
fights for victims a lot. But due to string evidence and support from U.S court, UCIL take out

themselves from this situations easily as they were having strong financial resources. Also, with
entity itself did not fulfil social responsibility in effective way. During this tragedy, large amount of
money, resources were used to overcome with problem.
Ethical issues-
Ethical issues are those which occur when given decisions, or activity foster the community
or society guidelines. In relation of UCIL, when this tragedy occurs it affects overall brand goodwill
at larger level & it was acquired by Dow Chemical (Xia, 2020). Due to this, system and structure
changes at rapid scale. There were many ethical issues which were faced by UCIL which are
further discussed as follows-
Toxic workplace culture-
It is one of the ethical issues which was faced by UCIL during Bhopal tragedy as in this
entity and leaders in firm manipulates figures, data at wider scale. Also, toxic workplace culture is
faced by business enterprises and as they favours against the injustice. Moreover, it is examined
that it is necessary for UCIL to change the work culture so that goodwill of firm increases &
retention of employees increases for longer period. Due to toxic work culture, UCIL was unable to
execute their operations in efficient manner. Toxic work culture has negative impact on entity &
work structure at larger scale (Zaerens, 2018).
Questionable use of company technology
It is another form of ethical issue which is faced by UCIL. In this, it occurs when there is
misuse of technology and improper usage of resources which affects the guidelines of society at
larger scale. It is crucial to focus on this ethical issue as main reason for gas leak was improper use
of safety and equipment to save cost expensive (Basha, 2020).
Due to this ethical issue, they put themselves to a big problem and their goodwill has been
impacted a lot. With improper use of resources with bad quality, gas was leaked & which leads to
loss of many lives as well as resources. It is duty of manager to make assure that such kind of
ethical issues are encountered in appropriate manner (Beatty, 2018).
Above discussed matter shows that it is crucial to generate new ideas and ethical solutions in
order to deal with issues. Also, it is too examined that appropriate business scanning is to be done
as it help in gaining knowledge about how and why ethics are crucial for organisations. Further, in
this changing work environment, it is necessary to have knowledge about such legal laws on basis
of which it is crucial to use make decisions regarding consequences.

CONCLUSION
After a brief analysis of above report, it has been concluded that it is crucial to have
knowledge about rules & regulations. So, discussions has been made about given case is based on
ethical issues at Union Carbide, Bhopal disaster. From analysing of both case studies, it is examined
that both businesses are affected by laws & rules as they directly affects working operations and
functions. In this competitive market, it is necessary to focus on these laws & regulations so that it
is easy to achieve goals & objectives.. It is critically important to focus on these legal as well as
ethics so that objectives are achieved appropriately.

REFERENCES
Books & Journal:
Ladleif, 2019, November. A unifying model of legal smart contracts. In International Conference
on Conceptual Modeling (pp. 323-337). Springer, Cham.
Le Menestrel, 2021. Corporate Social Responsibility: The Bhopal Gas Tragedy (Video, Case Study
& Discussion) Monday 15th of April, 2013–Marc Le Menestrel.
Ponterotto, 2017. Ethical and legal considerations in psychobiography. American Psychologist,
72(5), p.446.
Raghunandan, 2020. Bhopal gas disaster: Delhi Science Forum and People’s Science Movement in
India-In memory of Dr. Amit Sengupta. Saúde em Debate, 44, pp.120-134.
Rendleman, 2018. Remedies: Cases and Materials (2018). West Academic.
Xia, 2020. SME financing with new credit guarantee contracts over the business cycle.
International Review of Economics & Finance, 69, pp.515-538.
Zaerens, 2018, October. Concept for controlled business critical information sharing using smart
contracts. In 2018 2nd Cyber Security in Networking Conference (CSNet) (pp. 1-8). IEEE.