Indian Courts Can’t Handle Bhopal : Endless and Creaky Process Works Against Legitimate Claims

There is considerable irony in the Indian government’s lawsuit against Union Carbide on behalf of the Bhopal victims. Immediately after the gas leak, environmental groups in India blamed the government for failing to adequately monitor Union Carbide’s operations in Bhopal. They contend that the government should be a defendant, rather than a plaintiff, in any suit on behalf of the victims.

Another irony of larger significance is India’s decision to allow the suit to be tried in U.S. federal courts--a tacit admission that India’s legal system is incapable of providing redress to its citizens for wrongs done to them by a foreign corporation. Meanwhile, Union Carbide is most anxious to be tried in the Indian courts.

A situation in which a U.S.-based multinational corporation is fighting to be tried in a Third World country is a curious one indeed. For years, multinational corporations have, as plaintiffs, argued that U.S. courts should exercise their jurisdiction over disputes between such companies and their host countries.

The disputes typically arose when a Third World country expropriated some, if not all, of a multinational company’s property. The courts of the host country, the multinationals argued, would not provide them with just redress. In the Bhopal incident the positions of the host country and the multinational company have been reversed. In fact, the Indian Parliament passed legislation specifically aimed at denying Indian courts jurisdiction over the issue. The government sought the easy way out for one lawsuit that the Indian courts are admittedly incapable of handling. But the Indian government has not addressed the larger problems plaguing the nation’s legal system.

A person cannot help but be concerned when a country with many sound democratic institutions abdicates its responsibility to provide an adequate judicial forum for the protection of its citizens. The fact that juries in the United States tend to deliver verdicts for sums of money far greater than those within the contemplation of Indian judges was not the only reason Indian officials decided to seek redress in U.S. courts. They were prompted, I suspect, by their misgivings concerning more fundamental flaws in the Indian legal system.

The procedural devices employed by the Indian system are arcane. Complaints must conform to ancient causes of action. If the facts of a case arising from a 20th-Century dispute do not fit the mold of an 18th-Century cause of action, the plaintiff’s complaint is dismissed. The trial is a seemingly endless process, and judges permit the admission of evidence to drag on years after the suit has been filed. There is no distinct and finite period for the discovery of evidence and a trial.

There are no class actions in India today. Each person has to sue in his or her own behalf, even if a multitude of individuals have suffered similar injury. And, in order to ensure that plaintiffs are not bringing frivolous suits, Indian courts frequently require the posting of a bond that most Indians are unable to afford.

The state of the legal system is very important because contemporary India, unlike so many Third World nations, is a politically stable and economically viable entity. Thus the legal system’s inability to serve the nation’s contemporary needs is particularly disturbing.

Cynics can argue that it is a good thing that the pursuit of civil litigation in India is a fruitless exercise because society benefits whenever litigation is deterred. But that argument is superficial at best. When a legal system does not afford speedy justice, anyone who has a grievance pays a price. If a legal system is unable to enforce claims, it becomes meaningless.

And as India embarks on an economic policy of liberalization, the country’s obsolete legal system could prove to be a major impediment to economic progress.

U.S. libertarian scholars have long argued that any legal rule or procedure that restricts or terminates a creditor’s power to enforce his claim will chill, if not freeze, the extension of credit. The extension of credit is central to the healthy operation of a capitalist economy--at least one that is driven by capitalist incentives. And, even though it has an enormous public sector, India’s economy is fundamentally capitalist. A legal system’s failure to enforce the claims of creditors deters both individuals and corporations from extending credit. The lack of an enforcement mechanism forewarns a creditor that he cannot bolster his legitimate expectations with the force of law. In India’s case the libertarian scholars do seem to have a point.

The Bhopal case indicates that business creditors would not be the only ones to benefit from a more modern and efficient legal system in India. Personal-injury victims, civil-rights claimants, consumer groups and plaintiffs of every stripe also would benefit. Although it may be unseemly to suggest it, some good may flow from the Bhopal incident after all--radical reform of the Indian legal system.