India-Russia nuclear talks hit liability snag

Russian suppliers do not want any liability for accidents in India ...







30 July 2010
The Hindu

India-Russia nuclear talks hit liability snag

Siddharth Varadarajan

New Delhi: It is not just American suppliers, Russia too is now insisting that all liability for any accident that may occur in reactors sold to India must rest solely with the Indian operator and not with Russian companies involved in supplying components and knowhow.

At the last round of commercial negotiations held in Moscow recently between the Nuclear Power Corporation of India Ltd (NPCIL) and Atomstroyexport for the supply of four additional 1000 MWe reactors at Kudankulam (KK 3,4,5,6), the two countries failed to agree on the issue of liability. The Indian side wanted the contract to include a ‘right of recourse' which would allow NPCIL to claim damages from Atomstroyexport in the event of an accident resulting from negligence on the part of the Russian supplier. But Russian officials refused, citing the Inter-Governmental Agreement (IGA) the two countries signed in 2008 to back up their stand that all liability must be channelled on to NPCIL, the operator at Kudankulam.

Indeed, the IGA which India and Russia finalised in February 2008 and signed in December that year is clear on this point. Though the agreement has not been made public, The Hindu has accessed the text. Article 13 states: “The Indian Side and its authorised organisation at any time and at all stages of the construction and operation of the NPP power units to be constructed under the present Agreement shall be the Operator of power units of the NPP at the Kudankulam Site and be fully responsible for any damage both within and outside the territory of the Republic of India caused to any person and property as a result of a nuclear incident occurring at the NPP.”

Since Article 13 does not provide for the operator's right of recourse — a standard part of international conventions on civil nuclear liability — the Russian side says India's insistence on its inclusion in the commercial contract runs counter to the IGA.

Indian officials acknowledge the lacuna but put it down to India's weak negotiating hand in the days before the Nuclear Suppliers Group voted to lift its export ban on the country in September 2008. The language on liability was copied verbatim from the agreement for the first two Kudankulam reactors, though India — which is in the market for a mammoth 20,000 MWe of imported reactor capacity — is likely to drive a harder bargain in future negotiations with Russia.

More hurdles

Nevertheless, the current stand-off is likely to further complicate the Manmohan Singh government's efforts to pass a nuclear liability law that is acceptable to all domestic stakeholders and foreign partners.

The draft law includes three grounds for the Indian nuclear operator to invoke a right of recourse against its foreign suppliers. India is under pressure from the U.S. to dilute one of those provisions — Section 17(b) — which allows for claims in the event of negligence. Diplomatic sources told The Hindu that Russia was also uncomfortable with this clause.

Though Russia is refusing to include a right of recourse for the Kudankulam reactors, the 1963 Vienna Convention on Civil Liability for Nuclear Damage — which the Russian Federation acceded to in 2005 — allows for such a right if expressly provided for by a contract in writing.