Dow Chemicals fails to gain support from Union law ministry in India

13-May-08

Dow Chemicals has not found support from the Union law ministry for its stand that it is not liable to clean up the toxic dirt left by its Indian subsidiary Union Carbide at Bhopal in 1984. An internal note says that the Ministry of Law believes that 'irrespective of the manner in which Union Carbide has merged or has been acquired by Dow, if there is any legal liability it would have to be borne by Dow Chemicals.' The note raises uncertainty on the prospects for future investments by US-based Dow in India. With reference to the proposal of Dow Chemicals to invest US$1 bln in India, it has categorically stated that in view of the pendency of the writ petition in Madhya Pradesh High Court and the legal position stated above, it cannot be said that the investment proposed to be made by Dow Chemicals will be immune from the orders of the court. An application sought Rs 100 crore (US$25 mln) from Dow towards clean-up costs. In 2005, Dow began intense lobbying for legal immunity against Carbide's liabilities prompted by a May 2005 application by the Ministry of Chemicals in a case relating to toxic waste clean-up in the Madhya Pradesh High Court. Dow claims that its 100% subsidiary, Union Carbide, is a separate legal entity with its own system of liability management, and that Dow has inherited only assets and not Carbide's liabilities. The revelations could have an effect on the joint venture agreement between Dow Chemicals and Gujarat Alkalies and Chemicals Ltd. last April to set up a 200,000 tpa chloromethanes factory in Dahej, Gujarat (Dow's first major investment announcement since its acquisition of Carbide). In January this year, Dow Chemical's attempts to construct a Rs 300 crore R&D facility in Chakan, Pune, came to a standstill after villagers dug up approach roads to the construction site, coercing the the government to reconsider the permission granted to Dow. Citing Dow's mishandling of the Bhopal issues as a reason, students and teachers at the six prestigious Indian Institutes of Technology (IITs) have joined hands to bar any alliance with the company.