The Nuclear Liability Bill needs to be amended to ensure adequate compensation in the event of an accident.
18 June 2010
Putting victims at the centre of liability law
The Civil Liability for Nuclear Damage Bill 2010 is currently being reviewed by the Parliamentary Standing Committee on Science & Technology, Environment & Forests. There are several clauses and concepts that need to be amended to ensure the legislation meets its intended purpose.
1. The “maximum amount of liability in respect of each nuclear incident” is fixed at 300 million Special Drawing Rights, approximately Rs 2,050 crore. This figure is too low and can't possibly cover the kind of nuclear damage a major incident would cause to human life, property and the environment. Since the government wants to accede to the IAEA's Convention on Supplementary Compensation (CSC), 300 million SDRs has been chosen as national cap so as to receive compensation from countries that are parties to the CSC beyond that. One assumes the government will have to provide compensation above whatever limited sums come from the CSC. Some explicit commitment to this effect, therefore, is essential.
It is worth noting that the CSC will only enter into force if a country with a major nuclear programme like Japan accedes. That is unlikely to happen soon. If every country in the world joins the CSC, a maximum of 300 million SDRs would be available. But since the CSC will never attract universal adherence, the best a member state can hope to receive is around 50 million SDRs. Either way, these are not substantial sums. Thus, the Bill must be amended to allow for a proper level of compensation, well beyond the Rs. 2,050 crore “maximum amount of liability”. Since the CSC says the compensation amount a signatory specifies prohibits discrimination between national and cross-border victims of a nuclear accident, some national cap may be necessary. But legal language is needed to assure the people that the government will compensate them fully in the event of an accident.
2. Like the national cap, the liability of nuclear operators is also capped too low at Rs. 500 crore for each incident. The bill says the government shall be liable for nuclear damage exceeding that amount. Two amendments are needed to protect public interest. First, the law must clarify that the cap applies only to public sector operators. Second, the Rs. 500 crore cap is low even for a public sector operator and creates a double social cost. The fact that the operator is not forced to internalise the cost of damages he may cause will lead to the under-provisioning of safety. And, to the extent to which the operator cap is a subsidy towards the true cost of nuclear power, this would lead to the over-optimal share of nuclear power in India's energy mix. Depending on the extent to which society wishes to subsidise nuclear energy, the operator cap should be set at some point between Rs. 500 crore and Rs. 2,050 crore. The higher figure would be more in keeping with enlightened liability regimes in other countries.
Some argue that raising the operator limit will increase insurance costs. But nuclear plants around the world take out property insurance for sums several times higher than their accident liability and this does not affect the viability of nuclear power. Insurance premia, in any case, represent a very small fraction of the total cost of a nuclear plant worldwide.
3. The operator's right of recourse against suppliers under 17(b) should be preserved and perhaps strengthened to include defective equipment and design flaws. India should leverage its mammoth imports to get the supplier to accept a measure of liability in the commercial contract itself. Moreover, the right of recourse must be for the total damage caused by the supplier's negligence and not be limited to the operator's liability cap.
Since 17(b) deviates from the right of recourse envisaged by the CSC, India may have to enter a reservation if it accedes to the convention. Alternatively, it can adopt the liability bill but stay outside the convention like South Korea, which faces no impediment in doing business with U.S. suppliers. Not signing the CSC will also preserve the right of Indian victims to approach the courts of the country to which a nuclear supplier belongs in the event of an accident involving their negligence.
4. The bill extinguishes claims for compensation for nuclear damage made more than ten years after an incident. This limit is unconscionable. There is no reason why Indian law should impose such a limit for injuries to humans, especially when the Vienna and Paris conventions on nuclear liability allow a 30 year claim period. In Bhopal, many illnesses are manifesting themselves years after the original incident, and affecting subsequent generations. Physical damage may also require more time to assess. Twenty-five years after the Bhopal disaster, there is still uncertainty about liability for plant remediation. Certainly no claim was brought against Carbide on the question of site clean up within 10 years.
5. It is unsettling that the bill leaves the assessment of damages and claims for a nuclear accident to an executive rather than judicial body. While there is no reason to assume judges will be more sympathetic to nuclear victims than bureaucrats, the prohibition of judicial oversight embodied in clauses 16 and 35 cannot be justified. These will have to be amended or deleted, especially in order to end the ambiguity about the victim's right to file tort claims.
6. Ironically, nearly half the bill's clauses deal with the service rules etc of the officers who will process compensation claims rather than victim rights. As far as the composition of Nuclear Damage Claims Commission, it is shocking that more attention is paid to the bureaucratic qualifications of commissioners rather than their knowledge or competence to assess damage claims. In line with the complete exclusion of the health ministry and health professionals from the drafting process, the bill envisages no role for health and environment experts. Amendments are needed to remedy this.
7. Clause 46 says the Act's provisions “shall be in addition to, and not in derogation of, any other law for the time being in force” and that the operator will not be exempted “from any proceedings which might, apart from this act, be instituted against [him]”. According to officials, the stated intent of this clause is to preserve the victims' right to file tort claims. It also raises the possibility of criminal liability in the event of negligence on the part of the operator or, presumably, the supplier. But Indian tort law is poorly developed. As for criminal prosecutions, nothing more needs to be said in the light of Bhopal. Thus, for this clause to have any meaning, it must be accompanied by clauses that would facilitate tort claims.
The law ministry should also be asked to clarify what the intent behind mentioning only the “operator” in this clause is. Is it to simplify the filing of victim claims by channelling fault-liability on to the operator leaving him to recover damages from suppliers via his right of recourse? If so, does this mean tort claims cannot be filed against anyone other than the operator? Given the unhappiness over the Bhopal settlement of $470 million – the Centre, in a sense, channelled the claims of victims through itself but sold them cheap — the Standing Committee must ensure the nuclear bill does not dilute the victims' right to file tort claims against any party in the event of an accident.