The legislation sets up a three-member tribunal to be chaired by a district judge with the power to adjudicate claims for compensation as a result of Coca-Cola's operations in Plachimada.
The tribunal has been granted legal authority to summon individuals and documents, as well as seek and examine witnesses, and the bill legally binds Coca-Cola to follow the directives of the tribunal.
Under the bill, the tribunal shall apply the principles of sustainable development, the precautionary principle and the "polluter pays" principle. Once compensation is awarded, the company shall deposit the entire award amount with the tribunal. All appeals against the tribunal's decisions would go to the High Court.
The legislation is based on the report and recommendations of a High Power Committee whose report on March 22, 2010 holds Coca-Cola responsible for causing pollution and water depletion in Plachimada in the state of Kerala in south India.
Protest at the main gate of the Coca-Cola bottling plant in Plachimada, Kerala, India, April 5, 2006 (Photo by Kasuga Sho)
Using the polluter pays principle, the High Power Committee had recommended that Hindustan Coca-Cola Beverages Private Limited, HCBPL, a subsidiary of Atlanta based Coca-Cola Company, be held liable for Indian rupees 216 crore (US$48 million) for damages caused.
In its report, the High Power Committee said, "The Committee thus has compelling evidence to conclude that the HCBPL has caused serious depletion of the water resources of Plachimada, and has severely contaminated the water and soil."
"The Committee has come to the conclusion that the company is responsible for these damages and it is obligatory that they pay the compensation to the affected people for the agricultural losses, health problems, loss of wages, loss of educational opportunities, and the pollution caused to the water resources," states the report.
Coca-Cola's bottling plant in Plachimada has been shut down since 2005 as a result of a community-led campaign which accused Coca-Cola of exacerbating water shortages in the area and causing pollution.
"This is a landmark moment for the people of Kerala and India," said R. Ajayan of the Plachimada Solidarity Committee, which has been active in the campaign since its inception. "The passage of the bill means that people's will in Kerala has now become law of the land."
HCBPL has criticized the bill as being "devoid of facts, scientific data or any input from" the company and called the process "flawed."
The company said it is "reviewing all available options, but remains willing to engage with all stakeholders on this issue."
On its website, HCBPL says, "Allegations that The Coca-Cola Company is exploiting groundwater in India are without any scientific basis and are also not supported either by the Government authorities who regulate our water use in India, academics, or the local communities in which our plants are located."
Community members at Plachimada worry about water scarcity and pollution. (Photo by Kasuga Sho)
"Within approximately five kilometers of the Kerala plant, for example, there are about 200 open shallow wells. Coca-Cola uses only 2 open shallow wells within the plant," says HCBPL. "In the same area there are nearly 150 bore wells. There are only 6 bore wells within our plant and the Coca-Cola plant uses no more than 3 bore wells at any one time."
"In Kerala, where ground water levels have certainly decreased, the rainfall has been well below average for several years," the company says. "The Kerala State Ground Water Department has said that any depletion in ground water was due to poor rainfall and could not be attributed to the plant."
But community leaders argue that Plachimada is situated in the heart of Kerala's water belt and once had large underground water deposits that Coca-Cola has drained.
Plachimada community leaders have vowed to continue the campaign, demanding that the state government also charge Coca-Cola with criminal offenses.
The campaign against Coca-Cola in Plachimada has also enjoyed tremendous international support