Former asbestos products manufacturer James Hardie has challenged the NSW Government to set up a state-run compensation fund to bypass the court system and remove the risk of the company facing open-ended damages payouts to asbestos victims. The move has been criticised by unions and the Law Council of Australia.

The company will ask its shareholders to approve extra funds – estimated to be about $600 million – to pay victims without admitting any liability.

James Hardie has told the NSW Government inquiry into the handling of asbestos liabilities that the establishment of a specially designed statutory scheme under NSW law would be the most effective way of providing speedy, fair and equitable compensation. The inquiry will hand down its findings on September 21 on whether company executives engaged in misleading conduct.

Following the company’s proposal to set up the scheme, the Law Council has told the inquiry that broader corporate law reforms are needed to stop corporate groups from evading their responsibility to tort claimants and victims of the “widespread negligent use of asbestos”.

Australian Manufacturing Workers Union NSW Secretary Paul Bastion has also suggested reform of the Corporations Act so James Hardie can be sued and overseas assets recovered.

Another union has called for a boycott of James Hardie products.

Meanwhile, the Australian Council of Trade Unions has called on the Federal Government to take steps towards a treaty with the Netherlands – where James Hardie is now based – so that asbestos victims can pursue full compensation. James Hardie relocated from Sydney to Amsterdam three years ago in an alleged attempt to protect the assets of the company against further asbestos compensation claims.