Dilution of the Civil Liability for Nuclear Damages Act

The Indo-US nuclear deal of 2008 heralded a highly anticipated new era of nuclear expansion in India. A hope that dangled before a country suffering from an acute energy deficit, crippling power cuts, and the development needs of 1.3 billion hanging in the balance.Nuclear power was finally going to make all of India’s lofty ambitions a reality − a quick-fix for our problems of economic growth.

Almost instantly, the big names of the nuclear industry- GE, AREVA, Rosatom, Westinghouse- came knocking on a new market’s door. Deals were planned, discussed and inked. The ball was set rolling, and in some select sites such as Jaitapur and Koodankulam, construction of the new nuclear power plants started.

Local struggles and oppositions to these developments, were of course, relegated to the sidelines and for those who raised concerns about liability and compensation in case of accidents, the Indian government held up its Civil Liability for Nuclear Damages Act, and later the IAEA’s Convention on Supplementary Compensation (CSC) signed in 2010.

Both these developments took place within a month of each other. While the CSC was signed in October 2010, the Civil Liability of Nuclear Damages Billwas proposed in 2009 and passed as an Act in September 2010, after much discussion and a few amendments worthy of mention.

The Act, although imperfect, made a major point of departure from all current international conventions such as the CSC, in its section 17 (b) on the Right to Recourse for operators.  Unlike article 10 of the Annex to the CSC which provides for the same right of operators, the Indian Act upheld supplier liability even in cases where a nuclear incident has occurred as a result of an act of the supplier or his employees including the supply of equipment or material with latent or patent defects. Thus India’s current legislation would seem more stringent on supplier liability.

In addition to this, Sections 6 (1) and 6 (2) raised caps on compensation, and removed limits on them for amounts and time limits. Thus, the Indian Act actually seemed to be inclined towards extending protection to victims of nuclear accidents.

However, the industry was quick to express its sentiments over the Act. The French, American and Russian governments and industry representatives have repeatedly stated their hopes that India would amend or change the fine print under the Act. This would be an obvious demand from the industry since all current international conventions on nuclear liability are designed to protect it. The fact is that the risk of a nuclear accident and the potential damage it would cause are both exorbitant and incalculable. For example, according to some estimates it will cost USD 250 billion to just clean up the region destroyed by Fukushima, while decommissioning and dismantling the plant could take up to 90 years.

It is unperceivable for any single insurance company, or pool of companies to undertake such a risk for the nuclear industry, which makes it impossible for the industry to pay these damages.  Therefore, all international nuclear liability regimes have been established to protect the industry and place the onus of responsibility on the operators of nuclear power plants and not the suppliers. This has led to an almost uniform ‘operator pays’ principle across the board, making it seem like a standard, instead of a more just ‘polluter pays’ principle, which happens to be part of Indian jurisprudence. The fact is, however, that the nuclear industry is the only one with such a peculiar chain of accountability, compared to any other industry.

To address these industry concerns, India signed the CSC, while the Department of Atomic Energy notified the parliament of the Rules under the Act.  Since the CSC has only been ratified by a mere handful of countries, and requires the magic number of five ratifications to hold any force, it poses no threat to the Act, at the moment. The Rules however, if passed, are capable of creating some serious weaknesses in India’s nuclear liability regime.

Rule 24 withdraws from Section 17 of the Act. It stipulates limits with regard to the amount for which suppliers are liable, to the value of the contract or the extent of the operator’s liability, whichever is less. Similar limits are imposed on the number of years for which such supplier liability can be imposed, to only the initial licensing period, which is limited to five years, according to the AERB rules of 2004. This would mean that if a major nuclear disaster occurs, in the fifth year of a reactor’s life, where the value of the contract between the operator and the supplier is fifty lakhs, the supplier would pay only fifty lakhs, while the NPCIL might be faced with a bill running into crores. If the accident occurs in the sixth year of the reactor’s life, the supplier would pay nothing.

Thus, the Rules attempt to align the Act with the CSC, catering to nuclear suppliers, going against strong public policy arguments to the contrary as well as the opinion of the majority of Parliament expressed in 2010.

However, by doing so, the Rules go against the very spirit of the Act, and are thus invalid.In the upcoming session of parliament, the Indian government will vote on this set of rules. If passed by parliament, without appropriate amendments, the rules would provide a subsidy to suppliers in case of an accident. A subsidy offered at the potential cost of the lives of thousands of Indians.

It would be tantamount to a legal farce to have a set of invalid rules dilute an Act which sets itself apart with its attempt at balancing public interest with private ones.

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Author: Janhavi Naidu 

Greenpeace 

Email: janhavi.naidu@greenpeace.org