Business Law and Ethics Report: An Analysis of the Bhopal Gas Disaster

This report examines the Bhopal gas tragedy, a significant industrial disaster, through the framework of business law and ethics. The introduction establishes the importance of business laws and ethical conduct in organizational settings, highlighting their impact on management and operations. The report then delves into the specifics of the Bhopal gas disaster, detailing the causes, the release of methyl isocyanate gas, and the devastating consequences, including the immense loss of life and long-term health effects. It analyzes the legal actions taken, involving both the US and Indian governments, and the court proceedings, including the settlements and compensation awarded. The report also explores the ethical dimensions of the tragedy, focusing on the violation of ethical codes of conduct and corporate social responsibility by Union Carbide. The conclusion summarizes the key findings, emphasizing the crucial role of business laws and ethics in preventing such disasters and ensuring responsible corporate behavior. The report also includes a list of references used for research.

Business Law and Ethics

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK ( Individual report)...............................................................................................................3
Case study ..................................................................................................................................3
Ethical position of the parent US Union Carbide company........................................................6
CONCLSUION................................................................................................................................6
REFRENCES...................................................................................................................................7

INTRODUCTION
Business laws are the laws that has been used in forming of an business organization in
legal manner. These laws focus upon providing concrete framework which makes various
process within an organization conducted in smooth manner. Further business laws helps in
improving management process within an organization. Ethics consists of rules and regulations
that makes discipline and order maintained in relation to working environment of an
organization. Ethics are covered under ethical conduct or professional conduct in an
organization. Both the laws helps in achieving of goals and objectives set by an organization.
Scope of these laws are wider as they deal with different aspect covered in an business
organization. Nature is dynamic due to tendency of these laws to impact working environment
of an organization. The report covers Bhopal gas disaster case in relation to ethical code.
TASK ( Individual report)
Case study
Introduction to case
The case is known as Bhopal gas tragedy that is related to industrial accident which took
place in city of Bhopal, India. This is considered as one of the most fearsome incident within the
history of world. It has taken place within Carbide subsidiary which is an pesticide plant. Toxic
gas which was released is methyl isocyanate gas(MIC) and resulted into death of 50000 people
within the city. In this case various kinds of issues has arisen regarding role of judiciary. The gas
spread at very fast rate and within no time covered whole city and lead towards panic situation to
be caused. Also it lead over causing sensation within lungs of a individual. In this 1000 person
were dead immediately after leak of gas and harm happened to 3,598 in 1989. After two weeks
of the gas leak 8000 people died. Further to deal with this International Medical Commission
was established in 1993 and its function was to check upon long term impact of
disaster(Karpavithra and Karvittal, 2017).
Causes of disaster
The disaster took place when Carbaryl' was produced in 1997. It has been used to make
insecticide and did its first production of 25000 per year. The plant was having capacity of 5000
tonnes. As selling began of insecticide in 1980s but did not went as per the expectation which
made cost cutting in the plant to be done. Main cause of disaster was entering of water within

tank used for storing of Methyl isocyanate. This made disaster happened as reaction took place
which caused forming of carbon dioxide due to mixed substances. It made increase in
temperature which was not controlled by the stabilizers also. Further pipes were not well
maintained and were rusty or broken. All the content got released from the tank within two hours
of leak (Sambashivarao, 2017).
Legal action
In the legal proceeding UCC was included. Also in these proceedings both United states
and Indian Government is involved. Relation to this government of India passed the act of
Bhopal Gas Leak which made Indian government act as defendant on behalf of victims related to
disaster. First part of the proceedings were conducted in Federal Court of United States. Then on
April 17th 1985 an judgement passed by the court of U.S which stated that Union carbide should
give $5 million and $10 million as recompense in relation over impact caused upon victims. In
this judgement there was violation of human rights. This was done with the help of International
Red Cross Society which is an NGO. As the order was proceeded as full settlement but offer was
rejected by Indian government in relation to human rights.
In March 1986 another order was passed in relation to plaintiff by U.S attorney which
was $350 million after considering the impact. This was also rejected by Indian government as it
is violation of ethics related to Corporate Social Responsibility. After estimating up loss ratio
which was between $500–600 million over 20 years. Seeing this litigation was transferred to
Indian Supreme Court. Then Supreme Court of India analysed judgement passed by US Federal
Court. Trial was started again by making UCIL separate entity with Indian government.
(Cumming, Hou and Lee, 2016).
Supreme Court of India further proceeded over facts of case and evidences were cross
checked again. The Court initiated proceedings on November 1988 and marked it as final
settlement on February 1989. judgement was passed by supreme Court of India which stated that
US$470 million dollar has to be paid as compensation by Union Carbide which was final
settlement over the matter. It was initiated immediately after the order passed by Supreme Court
of India.
Appeal were head by Supreme Court in the year 1990 upon judgement passed in relation
to full settlement. Further in the case on October 1991 Supreme Court cleared the compensation
and dismissed the petition. Then order was initiated in relation to insurance which is been

provided to 100000 persons. Also court again looked and made final judgement over providing
guidance upon initiating the payment. UCC was order by court upon request for making
subsidiary upon Voluntary funds in order to treat victims affected from disaster. The amount that
was to be initiated in relation to insurance was $17 million.
Code of ethical conduct
Ethical code of conduct means those principals that has been formed in order to check
professionalism maintained in fair manner. The code of ethics means written statement that is in
relation to value and mission within an business organization flowed in appropriate manner. Inn
this approach is made through professional development within business organization. This also
increases value of ethics by increasing discipline and order while performing a task in an
organization (Carter and et. al., 2017). Further ethics is related to behaviour of employee in an
organization and makes process enhanced within an organization. Some important things of
ethics has been explained as follows:
 Such rules and regulations makes an organization prepare ethical framework in order to
create professional conduct in more effective manner. It is been done on the basis of
fairness trust and honesty.
 Members within an organization should follow codes which make violation over certain
terms and condition to be restricted. In case of violation strict action of termination
should be taken.
 In some industries various kinds of department is included within ethics like banking and
finance, specific laws that makes business done in more effective way. This is voluntary
by an organization to be followed.
Business ethics is related upon those principals which makes process and operation to be
organized in proper manner. This makes different kinds of issues deal with and solutions
regarding them should be marked out. Also problems in relation to employer and employee
which are based on discrimination, environmental issues, bribery and insider trading in relation
to social responsibility. Laws of such type makes basic standards of an organization maintained
which makes leadership developed in positive way.

Ethical position of the parent US Union Carbide company
From the above case it has been marked out that Bhopal Gas Tragedy was one of the
most deadliest thing happened to human kind. The major issue was related to violation of Code
of ethics and Corporate social responsibility. It caused death of many persons living within the
city. Further Corporate Social Responsibility has not been taken into consideration. As UCC did
not checked the containers condition and basic safety measures were not taken. Apart from this
ethical code of conduct has been violated in a way that the organization involved in the disaster
was not ready to pay amount of relief. Also the federal court of U.S in there proceeding
considered all facts of both sides. Another issue that rise was of Corporate social Responsibility
which was not taken into account by the organization in the form of controlling the leak of toxic
gas. The correct valuation of loss and issues identified only when the case was transferred to
Supreme Court of India. (Burra and Vamsi, 2017).
CONCLSUION
From the report it can be concluded that business laws and ethics are one of the most
important factor which helps in forming of an business organization while maintaining ethics
within an organization. Further the file covered about various kinds of ethical issues which has
been done by organization involved within it. This makes CSR issue to be identified with ethical
cod of conduct violation.

REFRENCES
Books and Journals
Burra, M. and Vamsi, V., 2017. Relationship between doctor and patient-a law, business or
ethics.
Carter, S.M and et. al., 2017. A code of ethics for social marketing? Bridging procedural ethics
and ethics-in-practice. Journal of nonprofit & public sector marketing. 29(1). pp.20-38.\
Cumming, D., Hou, W. and Lee, E., 2016. Business ethics and finance in greater China:
Synthesis and future directions in sustainability, CSR, and fraud. Journal of Business
Ethics. 138(4). pp.601-626.
Karpavithra, S. and Karvittal, S., 2017. The Role of Indian Ethics and Values. International
Journal of Engineering and Management Research (IJEMR). 7(2). pp.560-569.
Sambashivarao, M., 2017. Corporate Governance and Business Ethics-A Study. Splint
International Journal of Professionals. 4(2). p.42.
Stewart, C.E. and Evans III, R., 2017. Ethics Corner: Inadvertent Disclosure—Traps Await the
Unwary. Business Law Today. pp.1-3.
Vetterlein, A. and Hansen-Magnusson, H., 2020. Responsibility and Virtue Ethics: How to
Tackle Ethical Dilemmas in World Politics?. In The Rise of Responsibility in World
Politics (pp. 233-238). Cambridge University Press.
Online
Busines laws and ethics 2019. [Online] Available
Through:<https://www.britannica.com/event/Bhopal-disaster>..