India and U.S. likely to clash over nuclear liability bill

American suppliers unhappy with lack of “absolute liability” for operator ...


April 1, 2010
The Hindu

India and U.S. likely to clash over nuclear liability bill

Siddharth Varadarajan

New Delhi: Pilloried in India for crafting a nuclear liability bill that his critics say is aimed at pleasing American companies, Prime Minister Manmohan Singh is now facing criticism from an unlikely source: the U.S. nuclear industry.

The debate in India is over the liability limits the bill will establish in the event of a nuclear accident: Rs. 500 crore for the operator of a nuclear facility out of a total of approximately Rs. 2,100 crore, the difference between the two figures to be borne by the government. In line with an international treaty that India will accede to, the Convention on Supplementary Compensation for Nuclear Damage (CSC), the bill also legally channels liability to the operator but not in as clear-cut a way as American nuclear companies which are lining up to supply reactor components would like.

Speaking on background because of the sensitivities involved, an American nuclear industry source told The Hindu on Wednesday, “CSC Annex Article 3.3 says, ‘The liability of the operator for nuclear damage shall be absolute'… [But] the draft India bill has no provision making the operator absolutely liable, as required by the CSC.”

This objection assumes significance in the light of claims made by senior Indian officials in briefings to the media and political parties that the Rs. 500-crore cap applies only to “no-fault liability.” Nuclear operators and their suppliers would continue to be exposed to claims of tortious liability — liability for damages caused through some fault of theirs — by Indian victims in the event of an accident.

Indian officials on Wednesday cited Article 46 of the bill — which says the liability law will not take away from the provisions of the existing laws allowing action in the event of a nuclear accident — and reiterated the government's willingness to make the bill's provisions more explicit. They said the Article 35 exclusion of civil courts jurisdiction applied only to claims arising out of a ‘no-fault liability'. Civil courts would remain fully empowered to hear tort claims.
‘Right of recourse'

On his part, the American nuclear industry source also identified the ‘right of recourse' granted to nuclear operators by the Indian bill against suppliers as a major problem area. Article 17(b) of the bill — first highlighted in The Hindu— allows the operator to sue his supplier for recovery of any damages he is forced to pay if a nuclear accident results from “the wilful act or gross negligence on the part of the supplier of the material, equipment or services, or of his employee.”

“Like the lack of absolute or strict liability, 17(b) is inconsistent with the CSC, as well as the Paris and Vienna Conventions and the nuclear liability laws of every other country with a nuclear power programme,” the U.S. nuclear industry source said.

The American source also found fault with Article 46. “If this article means the operator would not be exempt from any other proceedings [other than criminal liability], that too would be inconsistent with the CSC requirement for exclusive operator liability. CSC Annex Article 3.9 provides, “The right to compensation for nuclear damage may be exercised only against the operator liable ... The draft bill has no such provision channelling liability exclusively to the operator.”

While the Obama administration has not said anything to India about these “problem” clauses, Indian officials say they are aware that the nuclear industry association in the U.S. is beginning its lobbying drive. “They have held a meeting and it is only a matter of time before Washington raises this with us,” an official said. “But they are also in a bind. After all, the Indian law is consistent with the CSC. But that doesn't mean we have to give up our rights under tort law and common law.”