A month after the union government notified it, the civil nuclear liability rules continue to matter of debate among the country’s legal experts and industry players. While some notice major lacunae over certain finer points of the provisions relating to Civil Liability for Nuclear Damage Act (endorsed on November 11), others sense that its overall effect is consolatory.
Eminent jurist Soli Sorabjee has opined that Section 24 of these rules, which deals with the provision for right to recourse, was “clearly ultra vires” the Civil Nuclear Liability Act and, thus, “invalid”.
On the other hand, M V Kotwal, member of the Larsen & Toubro Limited, says the rules seem to have addressed the industry’s “major concerns” regarding the capping amount and the duration of possible liability on suppliers. However, without clarity it would not be possible for any supplier — Indian or foreign — to participate in the programme, he notes. “There are some other issues in the rules that we are yet to examine in more detail,” adds Kotwal, also president (heavy engineering) of L&T. “Hence, we won’t comment at this stage.”
G R Srinivasan of GMR Energy says the Civil Nuclear Liability Act bears many issues related to the implementability of the provision of recourse to suppliers. This is especially so, if the period is long and the equipment are manufactured by many companies across several countries, he adds. “An analysis on these would lead one to pin the root cause down to the supplier,” says Srinivasan, who is advisor (nuclear power business) with the Bangalore-based infrastructure major.
He argues that their coverage will have to be 100 years with a probable life extension of 60 to 80 years. There could be many equipment replaced due to mandatory periodic upgrade. Only those which were inaccessible could be in place, he adds. “In trying to fit in a longer period, we may achieve exactly the opposite: that is, more dilution. This, when the five-year period could be very advantageous. There, we have chances of obtaining free design changes,” he says.
Sorabjee, a former solicitor general, says in his opinion sought by Greenpeace that the proposed Rule 24 was “unduly restrictive”, as it limits the amount which can be claimed by exercise of the right of recourse to the extent of the operator’s liability or the value of the contract — whichever is less. This will cause great hardship.
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“To illustrate: Take a case where a major nuclear accident occurs due to the fault of the supplier and the value of the contract is say Rs 1,000,000. In such a situation, while damages paid by the operator to victims could run into crores, the supplier will not be liable for anything more than the contract value, ie, Rs 1,000,000.
“A criterion such as the value of the contract has no rational nexus to the object sought to be achieved and hence there is no rational basis for curtailing supplier’s liability. Moreover, in my opinion Rule 24(1) is clearly inconsistent with Section 6 of the said Act read with Section 17 in as much as it scales down and reduces the liability prescribed by the said Act. Consequently the said proposed Rule is ultra vires the said Act and is invalid,” he adds.
Kotwal argues that the implications of the Act are of as much concern to Indian manufacturers as to those of any other country. India’s nuclear power programme, apart from being vital from the energy perspective, offers a major opportunity for generating much needed employment to several thousand people, he believes.
Srinivasan says operative error led to the accidents at Chernobyl & TMI. The Fukushima accident (nine months ago) happened because the parameters were beyond the design basis agreed between the utility, regulatory board and the designer. None of the cases will, thus, make it possible to seek recourse to supplier. “The present rules on right to recourse are optimum. They are the best option available,” he claims. “We only have to hope that suppliers will agree. Making it stricter severely affects the nuclear programme — both imported and national. Further diluting them will not be in the spirit of the Act.”