On Standing Committee Report on Civil Liability for Nuclear Damage Bill

Protecting Foreign Suppliers

Clause 17 of the Bill currently reads as follows:
17. The operator of a nuclear installation shall have a right of recourse where -
(a) such right is expressly provided for in a contract in writing;
(b) the nuclear incident has resulted from the wilful act or gross negligence on
the part of the supplier of the material, equipment or services, or of his employee;
(c) the nuclear incident has resulted from the act of commission or omission of
a person done with the intent to cause nuclear damage.

The Standing Committee has recommended that Clause 17 should now be amended as follows (changes in bold):

17. The operator of a nuclear installation shall have a right of recourse where -
(a) such right is expressly provided for in a contract in writing; and
(b) the nuclear incident has resulted as a consequence of latent or patent defect, supply of sub-standard material, defective equipment or services or from the gross negligence on the part of the supplier of the material, equipment or services.
(c) the nuclear incident has resulted from the act of commission or omission of
a person done with the intent to cause nuclear damage.

By adding "and" in sub-clause 17 (a), the right of the operator to claim damages from the supplier of nuclear equipment and material (right of recourse) has now been made entirely contingent on whether such right is explicitly provided in the private contract between the operator and supplier. In the likely scenario of the foreign suppliers not agreeing to provide for right of recourse in the contract, they cannot be held liable for any nuclear damage, even if they have supplied defective equipment. What is more dubious is that this significant weakening of Clause 17 has been done under the guise of strengthening the right of recourse against the foreign suppliers.

The US administration and the American nuclear industry lobby have objected to sub-clause 17 (b). They are not prepared to accept the right of recourse for the Indian operator vis-à-vis American suppliers. The Standing Committee recommendation is fully in line with the demand of the American lobbies. This amendment linking 17 (a) and 17 (b) will make it worse than what is there in the original Bill.

Liability Cap Unacceptable

The recommendation to enhance the operator's liability cap from Rs. 500 crore to Rs. 1500 crore is hardly significant, since total liability for each nuclear incident remains capped at 300 million SDRs (Rs. 2122.40 crore or $ 455 million) as per Clause 6 (1). This amount is less than even the Bhopal settlement of $ 470 million, which has been acknowledged as grossly inadequate by the Government itself.

It is noteworthy that none of the international nuclear liability conventions set any cap on total liability, but only set a floor. Countries like South Korea and Sweden have set operator's liability at 300 million SDRs, not total liability. The operator's liability in the US is $ 11.9 billion. Countries like Japan, Russia and Germany do not have any cap on total liability. In contrast, the Indian bill seeks to cap total liability to 300 million SDRs, displaying scant regard for the lives and security of the Indian people.

Further Objections

The Standing Committee report has failed to take on board several more objections to the Bill, especially regarding the extant provisions protecting the operator and suppliers from facing litigation and the ambiguities regarding nuclear accidents in defence installations and the jurisdiction of the AERB. It has also made an objectionable suggestion to create a liability fund to reduce government liability by levying additional charges on electricity.

The recommendations of the Standing Committee does not alter the fact that the intent behind the Civil Liability for Nuclear Damage Bill, as well as its provisions, are meant to facilitate India's joining the Convention on Supplementary Compensation (CSC), which was explicitly committed by the UPA-I Government to the US in 2008, during the nuclear deal negotiations. Other than the US, no other country having a substantial number of nuclear plants have signed or ratified the CSC. None of India's neighbours who could be affected by a trans-boundary impact of a nuclear accident are signatories to CSC and its funds cannot be used for augmenting trans-border compensation for settlements. India gains nothing from joining the CSC.