While horror and anger transcend all other emotions about Mumbai's Black Wednesday, eventually they will also raise issues of liability and damages. That the losses were occasioned by forces beyond the control of the management is not in doubt. Nonetheless, a critical issue would be: Whether these hotels were insured against acts of terrorism.

It is reported that these hotels did have such cover as an add-on to their overall public liability insurance policies. But if not re-insured, the corporations may not be able to claim full benefit under the policies.

Therefore, if the insurance cover is not adequate (there is a cap of overall Rs 750 crore -- Rs 7.50 billion), would the victims or their families be able to claim damages under a tort action from the corporations? The grounds could be that the hotels were negligent in not providing adequate security to their customers.

Can the lawmakers or the government be taken to task in a public interest litigation (PIL) against the State for not having a proper policy or laws to deal with terrorism or the catastrophic damages arising from such acts, which may have been prevented, had the agencies been more vigilant?

The US Congress was so beleaguered by rampant lawsuits over the failure to prevent the attacks, not to speak of the third party claims for the losses, that it passed a law putting a cap on third party liabilities and claims.

This kneejerk action may work for a nation which underwent such an experience first time round, and have put systems in place to ensure there are no repeats. In India there is no redressal or compensation mechanism.

Following the events of 9/11, various governments introduced specific Terrorism Insurance laws under which, if such an incident occurs, any provisions which seeks to exclude liability for terrorism is deemed to have no effect.

Such laws impose obligations on insurers to provide terrorism cover in respect of contracts and eligible properties including buildings, roads, tunnels, airports, etc. Statutorily, it also enables the insurers to obtain further reinsurances.

Pondering on these lines, can a case of criminal liability be made out against the corporations? Apparently not. To lump these tragedies in the same class as Bhopal Gas and Uphar cases would be patently unfair particularly as the hotel personnel rallied, and many of them at the cost of their lives. But some questions will persist, as the storm abates.

How could the hotel management be ignorant of the hoarding of ammunition and arms -- enough to sustain the attack against police and the armed forces; this could not happen overnight .

Where were they stored and who was the insider(s) conniving, and if such connivance can be established, which are the heads that will roll? Can the corporations be prosecuted, and the directors be charged as being vicariously liable?

In fact, the entire issue of criminal liability of the corporations has gained complexity with awareness about social responsibilities, environmental issues, quality issues and accountability of the company to its stakeholders and public at large, which is now integral to corporate governance.

In so far as the current government is concerned, in spite of the spate of incidents in this year itself, no action was taken except short-term tightening up of the security arrangements at vulnerable spots. The hospitality industry was complacent and did not put its act together even while the JW Marriott was blown up in Islamabad. An intensive security regime is inconsistent with claims of comfort, adds to establishment costs, and can be intrusive for customers.

Disaster management laws and their solutions evolve from actual experience -- except we have had one too many. Except this time round it has hurt too many, not just our own inured populace , whose attitude has fomented neglect, but investors and travelers from diverse nations, whose survivors have deep pockets and may not take this lying down.

Kumkum Sen is a Partner in Rajinder Narain & Co.

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