Business Law and Ethics

This document provides an overview of business law and ethics, with a focus on a case study of the Bhopal gas tragedy and the ethical issues at Union Carbide. It discusses the causes of the disaster, legal actions taken, and the code of ethical conduct. The document also explores the ethical position of the parent company, US Union Carbide.

Business Law and Ethics

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
TASK 2............................................................................................................................................3
PART 2(Ethical issues at Union Carbide).......................................................................................3
Case study ..............................................................................................................................3
Ethical position of the parent US Union Carbide company...................................................6
CONCLSUION................................................................................................................................7
REFRENCES ..................................................................................................................................8

INTRODUCTION
Business laws are those set of rules and regulations that helps in establishing of business
organization as per sections covered within business law. Scope of both the laws are broader in a
way that different aspects regarding business is covered within an organization. Nature is
dynamic which makes an business organization to grow itself. This file is divided into two parts
that is essay and individual report. Second part is individual report on case study of Bhopal gas
tragedy in relation to Ethical issues at Union Carbide.
MAIN BODY
TASK 2
PART 2(Ethical issues at Union Carbide)
Case study
Introduction to case
This case of Bhopal disaster is commonly known as Bhopal gas tragedy over industrial
accident. The incident took place within Carbide subsidiary pesticide plant in the city of Bhopal ,
India. From 2-3 December 1984 plant released approximately 40 tonnes of toxic methyl
isocyanate(MIC) gas. The toxic gas got exposed to 500,000 people. In this mixture of poisonous
gases was there all over the city which caused panic that resulted into Burning sensation within
the lungs. Thousand persons died immediately after the leak and lot of damage was caused
resulting into panic situation. Death's that were officially identified were 3,598 in 1989. further it
estimated that 8000 died over two weeks has died from gas-related diseases. The disaster has
frequently cited as industrial disaster. International Medical Commission has established in 1993
responded over incident to long term health effects of disaster.
Also owner of factory UCIL was mainly owned by UCC with collaboration with Indian
government controlled banks and public holding of 49.1% stake. In 1989, UCC paid $470
million ($929 million in 2017 dollars) to settle litigation stemming from the disaster. In 1994
UCC sold its stake in UCIL to EverReady Industries India Limited. It later on merged with
McLeod Russel(India)Ltd. The site was cleaned on site in 1998 when termination of 99 years
lease over making control through site of sate government of Madhya Pradesh. Later on Chenical
Company purchased UCC in 2001 this was after seventeen years of disaster. After this Civic and

criminal case was filled in the District Court of Bhopal and involved UCC with Warren
Anderson, UCC CEO when disaster took place. In June 2010, seven former employees with the
Chairman of UCIL were condemn for disaster causing death by negligence. They were sentenced
to two years imprisonment and also fine of $2,000 each were imposed upon them. Eight
employees were convicted but died before the judgement was passed and Anderson died on 29th
September 2014 (Dorff and Gary, 2016).
Causes of disaster
The plant in Bhopal where disaster has taken place were producers of 'Carbaryl' in 1997.
Carbarlyl is mainly used as insecticide. At first production was 25000 tonnes per year. Then no
problem according to plant which is designed for making output of 5000 tonnes. In the beginning
of 1980's the sales of the insecticide was not going well. This is the reason that owner of plant
has cut the costs. It includes employing of few people over maintaining less frequently and
makes lower-grade steel. Also they were in impression that of closing the organization and
disaster has happened over making production. Plant is been considered over surplus amount of
material within market.
The disaster mainly happened due to entering of water within the tank which contain
Methyl isocyanate. It has caused chemical reaction which has resulted in formation of Carbon
dioxide with various other substances. This has been resulting over reaction through which
temperature increased and reached over 200 Celsius. In this pressure increased so much that
tanks was not able to tolerate it. Also the pressure controllers of were not able to control pressure
it resulted in making toxic gases within environment. Pipes become old and rusty over reaction
faster. All contents from the tank got released within two hours and tank's condition were also
not good. These were some reason which resulted into causing of disaster.
Legal action
In the legal proceeding it is involved that UCC within the United States and Indian
government, local Bhopal authorities and disaster people. Indian government has passed the
Bhopal Gas Leak Act in March 1985 and made Government of India as legal representative for
victims of disasters (Denvir and Delacroix, 2020). In the initial stages of lawsuit proceeding were
going on in United States federal court system. The in 17th April 1985, Federal District court
judge John F. Keenan in which it was marked out that fundamental human decency requires
Union carbide passed the order to immediately give $5 million and $10 million to injured

people. The money was suppose to be distributed with the help of International Red Cross. UCC
said that doing is not constituting over admission of liability that makes figures to be carried
forward upon any kind of future settlement. The company offered $5 million relief fund that was
rejected by Indian government .
Further on March 1986 UCC proposed over settlement figure by plaintiffs U.S attorneys
of $350 million which would have been made according to organization of an company. This
makes generating of fraud for Bhopal victims that was between $500–600 million over 20 years.
Now the litigation was transferred form United States to Indian courts by the U.S. District Court
Ruling. Following an appeal of this decision U.S. Court of Appeals affirmed the transfer and
made judging in January 1987 which stated that UCIL was an separate entity and is been
managed by Indian citizens in India only.
Government of India has refused the offer from Union Carbide and made as claim of
US$3.3 billion. In this Supreme Court told that both sides has come to an agreement that the case
should be started with clean slate in November 1988. Further there was an out court settlement
made in February 1989. Also union Carbide agreed for making payment of US$470 million for
making damages that has happened due to Bhopal disaster. The amount was paid on immediate
basis (Brinkmann, 2019).
In 1990 Indian Supreme Court heard about appeals over the settlement made. On
October 1991 Supreme Court made it clear that $470 million is to be paid and dismissed any
petition challenging original decision. Further court ordered Indian government for making
purchase upon settlement of funds and insurance policy cover of 100000 persons should be
covered as they can develop symptoms later on. Also any other settlement of fund has to be
made. Then UCC was requested by court and its subsidiary UCIL to voluntary make funding to
be done to treat victim of Bhopal disaster. The amount was $17 million to which the organization
agreed.
Code of ethical conduct
Ethical code of conduct are those principles which has been formed in making
professional conduct to be done over business honestly and through integrity. Code of ethics are
the documents which makes outlining of mission and value within an business organization
possible. In this professional approaches and problems is been solved existing in business

organization. As per this ethical code of conduct various principals which is based over making
development of core values and standards through which professionalism has been maintained
within an organization. It is also known as an “ethical code” that covers areas in business by
making professional practices to be made with employee code of conduct. Further various
important part of ethics has been explained as follows:
 These are those set of rules and regulations which is been followed within an
organization over ethical guidelines set by them. In this integrity, honesty and
professionalism is covered (Brennan and Magness, 2018).
 Members within organization should follow the code of conduct and violation of these
rules result into termination of employees also.
 In some industries various other things are included within it that is banking and finance,
specific laws which helps in making governing of business to be conducted. Though code
of conduct is voluntary adoption.
Business ethics is been refer over ethical principals upon which various operations in
business is been run by them. There are various kinds of issues that has to be solved within an
organization and these issues are employer-employee relation, discrimination, environmental
issues, bribery and insider trading with social responsibility. In this laws exists over setting some
basic standards in business community is dependent over making business leadership to be
developed with code of ethics.
Ethical position of the parent US Union Carbide company
After analysing the above disaster case it can be observed that various kinds of events
took place. As this was the biggest disaster that has happened in the history of India which
caused death of lot of persons. In this case the parent company was US Union Carbid. The
company had a sub company UCIL which was involved in the disaster. The parent company at
first did not followed the ethics as they were giving very less amount which was not even
appropriate for victims of disaster. It was only after the interference of Supreme Court of India
that $470 million were paid by the parent company. So, in ethical sense the parent organization
was wrong (Batrancea, Nichita and Batrancea, 2018).

CONCLSUION
From the above file it can be concluded that business laws and ethics are two important
form of law that has been making an organization cover various aspects related to it. Both the
laws helps in improving organizations and its perspectives. Second part is based on case study
which is related to ethics used in an organization.

REFRENCES
Books and Journals
Batrancea, L., Nichita, A. and Batrancea, I., 2018. Precepts of Business Ethics on the Romanian
Market. In Regulations and Applications of Ethics in Business Practice (pp. 227-255).
Springer, Singapore.
Brennan, J. and Magness, P., 2018. Estimating the cost of justice for adjuncts: A case study in
university business ethics. Journal of Business Ethics. 148(1). pp.155-168.
Brinkmann, J., 2019. The Potential Use of Sociological Perspectives for Business Ethics
Teaching. Journal of Business Ethics. 156(1). pp.273-287.
Denvir, C. and Delacroix, S., 2020. Virtually teaching ethics: experiencing the discrepancy
between abstract ethical stands and actual behaviour. In Modernising Legal
Education (pp. 204-220). Cambridge University Press.
Dorff, E.N. and Gary, M., 2016. Donations from Ill-Gotten Gain in Jewish Law and Ethics and in
American Law. Journal of Jewish Ethics. 2(1). pp.1-40.
Forganni, A. and Reed, H., 2019. Circumvention of Trade Defence Measures and Business
Ethics. Journal of Business Ethics. 155(1). pp.29-40.
Grant, D., Menter, L. and Kordecki, G., 2019. The CPA Examination as Outcome Assessment:
The Case for Stronger Business Law in the College Curriculum. Journal of Accounting,
Ethics & Public Policy. 20(3). pp.421-449.